SEED$ offering alternative to payday loans | Local Business

Laddie Cross, business and lending specialist for Southeast Economic Development Fund Inc. (SEED$), is a retired banker who said many might find it tempting to turn to a payday loan for a quick fix they think will tide them over to the next paycheck.

But, in states like Missouri, which lightly regulates predatory lenders in comparison to other states, those borrowers could face charges equivalent to 463{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} for short-term loans.

At the end of last summer, SEED$ began offering a program that gives borrowers an alternative to predatory lenders. Launched in July 2020, the Community Loan Center of Southeast Missouri (CLC) is an employer-based, small-dollar loan program offered through participating employers in the East Missouri Action Agency (EMAA) service area. In fact, EMAA is one of the employer participants.

“Someone might have a car repair they don’t have the money for at the time, or someone need to take the family on a vacation and they want to have the extra funds,” Cross said. “We’ve had some employees take out renewals, where they pay off the original loan and take out another one.”

Cross said the interest rate is a fraction of that charged by payday loan companies on a loan of up to $1,000, and the loan is expected to be paid off in a year. The amount of the loan is determined in part by the borrower’s salary — it can’t be more than 50{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} of a monthly paycheck, so if someone earns $2,000 a month, they can borrow $1,000.