NEW YORK–Inclusive, the African American Credit Union Coalition and HOPE Credit Union have filed a comment letter to the CDFI Fund regarding its newly designed Small Dollar Loan Program (SDLP), which was announced in July.
“Our overarching goal with these comments was to ensure that small dollar loans made through this program are ones that will strengthen, rather than weaken, people’s financial security,” the organizations announced. “Our comments focused on ensuring that small dollar loan characteristics and practices are responsible, low-cost and transparent while ensuring that small community lenders offering high-quality loans are able to successfully compete for funds. The comments highlight best practice small dollar loans such as Borrow and Save, which enables borrowers to build savings while meeting emergency household cash needs.”
Among the arguments made in the comment letter:
- Loans made possible through this program should be required to have affordable terms, including an interest rate cap
- Rates should be limited to 18% APR or lower
- Reporting requirements should be designed to collect enough data about the program to allow evaluation of the program to be substantive and transparent to the public, the letter states.
Tracking the program at the loan level would not be prohibitively burdensome and would help ensure that future CDFI Fund resources go to the areas of greatest need, the organizations said.