Unbanked and Underserved: The Importance of a Bank Account

Nationally, more people than ever are opening bank accounts. Opening and maintaining a bank account can be one of the most effective ways to achieve your financial goals, including increasing your credit score, buying a house, or just finding financial security. In 2023, the US’s unbanked rate dropped to 4.2%-- the lowest level since 2009. Northeast Ohio, however, is seeing a different trend. The unbanked rate in NEO increased from 2.0% in 2021 to 5.4% in 2023–an increase of over 3%!

There are a variety of reasons why people avoid mainstream financial institutions: 

  • Lack of trust: Many groups have been victims of racist and exclusionary practices by the mainstream financial industry that have systematically left them out of the system.
  • Minimum Deposit: Until recently, most banks required a minimum amount to even open an account and maintain the account, making them inaccessible for many people with inconsistent income. 
  • Fees: With inconsistent income, many people face high overdraft and/or administrative fees, making traditional banking too costly. 

Groups that are typically left out of traditional banking tend to be “lower-income, less-educated, Black, Hispanic, disabled, and single-parent households.” Households of color are five times more likely to be un- or under-banked compared to white households.

Those unable or unwilling to participate in the mainstream financial industry have few other options. For most, the only option is to rely on predatory services that require high fees and implement exorbitant interest rates, forcing people to pay up to 5% of their income to access their own money. This could add up to over $40,000 over one’s lifetime. These predatory lenders send people into a cycle of debt that becomes untenable and leads people further into financial instability. Even those who may have a bank account can be considered “underbanked” when they still rely on nonbank financial services, such as check cashing services or pawn shops, and therefore are still vulnerable to exploitative practices. 

This is not inevitable. Bank accounts provide many opportunities in the modern economy, like establishing and building credit, avoiding fees to access their money, and growing wealth.

The Consumer Financial Protection Bureau under the Biden Administration has recently ruled to crack down on bank overdraft fees, offering banks the option to either have a flat $5 fee, cap the fee to cover costs and losses, or “charge any fee but disclose the terms of the overdraft loan they extend to customers the same way they would for those of any other loan.” This new rule can save consumers $5 billion, or roughly $225 per household. Many banks have stepped up to the challenge of making mainstream banking more accessible. Working with the Bank On National Advisory Board and Coalitions across the country, like the ones in Cleveland and Summit County, banks have lowered the barriers to banking. This includes limiting fees, removing minimum balance requirements, and working with community partners to connect people to accounts. 

HFLA of Northeast Ohio can provide a third option. 

HFLA has offered 0% interest loans for 120 years. Rather than continuing to spiral into a perpetual cycle of uncertainty, our loans give people the chance to stabilize their financial situation and start on the path of rebuilding. Our applicants are individuals who often get turned away from traditional banks. They are seeking help to address a need like a required home repair, medical bills, or to get out from predatory loans. We ensure that our loans are accessible, affordable, fast, and fair. Our loans are not “easier” to qualify for, but we work to remove barriers to help people get much needed capital. People are so much more than a 3-digit credit score. We try to understand the whole picture and prioritize repayment history and budgeting plans when considering their application. 

There are still some barriers. All of our loans require a cosigner or guarantor. As a nonprofit, we rely on our loans being paid back to continue our work. Co-signers and guarantors provide a level of security to ensure that the loan is paid back in full.

Our staff will work with an individual through the complete repayment of the loan. Successful repayment is just as important to us as their loan payments go back into our revolving loan fund to help fund someone else’s loan, continuing the cycle. Our hope is that you come to HFLA for your first loan and through our support (and credit reporting) you will be able to access the mainstream financial system for your second loan. 

With unbanked rates increasing in the Northeast Ohio area, support is needed now more than ever. Since 1904 HFLA has created financial opportunities for its community.  If you want to support HFLA’s mission, you can donate here to assist with operational costs to keep our organization going. If you know someone who might benefit from an HFLA loan, please visit us at interestfree.org or contact us at team@interestfree.org. 

To learn more about this topic, take a look at the Federal Reserve Bank of Cleveland’s FedTalk: “A Continued Discussion on Financial and Payments Inclusion”.

by hflaneo

Hear Our Stories: 2020 Loan Recipients

Hear Our Stories: 2020 Loan Recipients

Each year we highlight a group of HFLA loan recipients who embody the our mission through their personal story and character. This year, we have highlighted a group of extraordinary women, who through strength, resiliency, and resourcefulness, overcame obstacles and moved closer to achieving their dreams. HFLA is proud to have been a part of their journeys as a resource that provided the support they needed at a pivotal point in each of their lives.

The Carmens

HFLA helped three generations of Latina women on Cleveland’s near west side regain control of their finances. 

After Carmen Vazquez’s husband passed away, her family struggled to adjust to their new financial situation. She, her daughter, and her mother began living together and supporting each other financially.  However, when critical repairs needed to be done to their home, Carmen’s family did not have enough saved to cover the expenses, and they were unable to obtain a bank loan for the repairs. 

HFLA first met Carmen during open office hours at one of our partner organizations, Metro West CDO. Jose Colon of Community Financial Centers was working with her as her financial coach. He suggested that Carmen apply for a small, interest-free loan from HFLA to help consolidate some high-interest credit card debt that accrued after her husband’s passing, which would help her qualify for a home equity loan later on. Carmen and her mother applied for the loan, and her daughter stepped in to guarantee the loan for them.

HFLA’s interest-free loan allowed Carmen to move the credit card debt onto a short term, interest-free repayment schedule. She continued working with her financial coach and developed a very disciplined budget with new strategies to help her stay on top of her finances. Carmen no longer has high-interest credit card debt holding her back from accessing the funds she needs to repair her home and will soon re-apply for a conventional home equity loan through her bank.

Patti McSuley

HFLA helped a breast cancer survivor make a safe space for women battling cancer to feel beautiful.

Patti McSuley had been working as a cosmetologist for only a few years when she was diagnosed with breast cancer in 2008. Medical bills quickly piled up from her treatment and, like many Americans, Patti filed bankruptcy due to the insurmountable debt. After the experience, Patti began Compassionate Wigs, a wig salon for women going through chemotherapy or hair loss. 

At its start, Patti’s business was a room within a larger salon. She realized that her business would quickly outgrow this space due to the amount of wig inventory needed to serve her clients. As she began to look for a new location for her business to grow within, she also began searching for funding sources. Patti received a small grant from the Youngstown Business Incubator and a low-interest loan from the Mahoning Valley Economic Development Corporation to secure her space and make the necessary renovations.

Unfortunately this funding would not become available for Patti for a few months and she needed capital immediately to make the salon operable and obtain needed inventory. Because of Patti’s previous bankruptcy, she was ineligible for a traditional small business loan. It was at this point that Patti was referred to HFLA by the Youngstown Neighborhood Development Corporation as a way to increase her stock of wigs, wig cleaner, and other specialty products that she needed for her new storefront business.

Today, Patti is the proud owner of Salon 224 in Boardman. She provides traditional salon services and operates Compassionate Wigs out of the salon in a private room large enough for women to come in with their own support team as they work with Patti to choose and style their wig. HFLA’s loan helped Patti achieve her dream of making each woman look and feel her best during cancer treatment,

Chika Morkah

HFLA was able to help an international student achieve her educational goals. 

Chika Morka is an international student from Nigeria who came to the U.S in the Spring of 2016 to further her studies at Cleveland State University. After her arrival, changes in laws made it impossible for her to receive money from her home in Nigeria, stranding her one semester away from graduation with no way to pay her tuition. Chika was introduced to HFLA by a classmate who had received an HFLA education loan previously. This education loan allowed Chika to not only pay for her tuition and register for her last semester for her at CSU, but allowed her to remain in the U.S. on her student Visa. Without this funding, Chika would not have been registered for classes and would have been forced to return home as she would have been out of compliance with her Visa.

Chika finished her Master’s of both Psychology and Diversity & Inclusion Management in Spring 2020, and is currently pursuing a PhD in Global Leadership and Change.

“I was ecstatic when I received my education loan. I was worried that I wouldn’t qualify because I am an international student, but I was relieved and grateful. It was a life-changing moment for me. I have been spreading the news in my own little way to tell people about the positive impact an organization like HFLA is having in the Northeast Ohio community.” – Chika

DeLane Anthony-Loggins

HFLA helped a small business stay on track during the COVID-19 pandemic. 

DeLane Anthony-Loggins is an MBA graduate, licensed esthetician and the small business owner of The Wax Bar originally located in Woodmere Village.  She opened The Wax Bar and Beauty by LA at 25 years old. Through hard work, she has built her business to nearly 3,000 clients over 6 years.

In March when the COVID-19 pandemic hit and the state of Ohio mandated closures of “non-essential” businesses, including salons and spas, DeLane was forced to close. It could not have come at a worse time–she was in the middle of planning her salon’s expansion and relocation.  DeLane began the process of expanding her salon several years ago. The abrupt and indefinite closure of her business left her at a crossroads: should she move forward with her expansion plans or put her dream on hold? DeLane initially decided to put the move on hold.  Fortunately, a few weeks later, the landlord of the storefront where DeLane wanted to relocate the business sent her information on HFLA’s interest-free loan. 

DeLane’s Small Business Emergency Loan allowed her to order PPE and supplies to prepare herself and her business for reopening. This interest-free loan also allowed her to move forward with her plans to move and expand her business. “There’s always a silver-lining, even when you least expect it.  HFLA during the pandemic was my silver-lining.” – DeLane

by hflaneo

News 5 Cleveland: Local non-profit helps people of color overcome financial roadblocks

Local non-profit helps people of color overcome financial roadblocks
By: Mike Brookbank
Posted at 5:34 PM, Oct 20, 2020
and last updated 6:28 PM, Oct 20, 2020

CLEVELAND — A local non-profit is looking to break down the barriers that keep people of color from accessing capital.

When Angela Sharpley set out to secure the funding she needed to expand her business, she initially found some resistance.

“I was told that there was no help for me out here,” said Angela Sharpley, small business owner.

It was the message she heard from a lender right out of the gate.

“They never got to my credit, so that’s the only thing they had to go off of was who I was,” said Sharpley.

When intentionally placed roadblocks prevent people of color like Sharpley from accessing the cash they need, HFLA of Northeast Ohio steps in to help bridge that divide.

“Our mission is to help people that don’t have access to fair financial tools,” said Michal Marcus with HFLA of Northeast Ohio.

For more than a century, the non-profit has been providing interest-free loans to those who might otherwise go without just because of who they are.

“How race and racism play out with regards to access to capital and investment absolutely needs to be at the forefront,” said Mark Joseph, CWRU professor of community development.

Along with intentional decisions based on appearance, Joseph said there is implicit bias at play.

“We have something in our perception or mindset that would lead us to believe that someone who is African-American, a person of color, is less creditworthy,” said Joseph.

Along with racism, not knowing where​ to find resources often keeps access to funding out of reach. Joseph said that includes “understanding where you can go for loans, for investment, or capital.”

It’s a similar issue Sharpley said she faced when starting out.

“You don’t have a road map to know where to go,” said Sharpley.

When people do finally find that direction, Sharpley hopes they have an equal chance to get the cash they need to invest in their community.

“I would like for the playing field to be made fair,” said Sharpley.

On Wednesday night, HFLA will tackle these and other topics during a virtual event called “Fostering Economic Equity: Fixing the Racial Imbalance in Consumer Finance.

“More corporations, banks, and larger financial institutions need to step up with fair financial tools,” said Marcus.

The online conversation begins at 5:30 p.m.

It is free and open to anyone in the community.

You can register at Interestfree.org.

Copyright 2020 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Watch the full event and panel discussion, Fostering Economic Equity: Fixing the Racial Imbalance in Consumer Finance, on our website here: www.interestfree.org/events/fostering-economic-equity/

by hflaneo

What can HFLA of Northeast Ohio do to foster financial equity?

Dear Supporters,

It feels like such a long time ago that the stay at home order was declared, schools were closed, businesses shuttered, and we saw our own normal operations swiftly shift to high-demand, touch-free, and remote procedures. Our state has moved forward since these mandates and Ohioans are trying to create some sense of normalcy within this chaotic period in our American history. Despite the national pandemic, protests continue to fight for change and equitable practices within our country and government systems, leaving HFLA of Northeast Ohio to confront a very important question:

What do we do to fight for change and equitable practices within the region we serve?

As staff and board members, we have an idea where to start, but we want to hear the input of our supporters, our clients, and our entire Northeastern Ohio community.

HFLA’s interest-free financing options are available to those who are unable to access conventional forms of financing. This inability to access bank or credit union loans is often due to systemic barriers that prevent those circling poverty from achieving financial security. Some of the most underserved populations in our country in terms of access to finance and capital are African Americans and Latinx communities.

Within our Northeast Ohio region, HFLA’s loan disbursement includes 52% to Black/African Americans individuals and 9% to Latinx borrowers. HFLA has smaller percentages of loans going to other demographic groups, including 3% to borrowers of Middle Eastern descent, 2% to Asian/Pacific Islander, and 2% to two or more races. Our business loan portfolio is made up of 62% business owners/entrepreneurs of color and 42% of all business loans are made to BIPOC (black, indigenous, and people of color) women (data retrieved August 2020).

HFLA has always served those who were left without equitable financial resources. Whether that means serving European immigrants in the early 1900s, or serving communities struggling to overcome economic barriers today.

This fall, on October 21st, 2020, we will take a step towards confronting the systemic inequities in the financial system with an online panel discussion with area leaders titled:

Fostering Economic Equity: Fixing the Racial Imbalance in Consumer Finance

Please stay connected with us as we provide more information and updates. This will be an honest and enlightening discussion on what the current situation is and what changes can be made to make a better future for all Northeast Ohioans.

Together we can replant Northeast Ohio.

Learn More

by hflaneo

Savings Strategies for a Tight Budget

While HFLA of Northeast Ohio is here to provide interest-free loans to those who need them, the ultimate goal is to not need one. How? Meet your new best friend – a Savings Plan.

Ideally, a savings account or emergency fund can give you the cash you need in times of crisis without relying on loans or cash advances.

Unfortunately, we are all currently stuck smack in the middle of a global health crisis. A crisis that is having a major impact not only on our daily lives and health, but especially on our income and personal savings. Fortunately, many of us will be receiving a tax refund that can give our finances a boost. While cash during this crisis may feel like the answer to all your problems right now, it is important to use this money wisely and to think long-term. This can help you take effective steps towards a long-term savings plan to get you and your family through this pandemic and find financial security in the future.

What is an Emergency Fund?

The rule of thumb for an “Emergency Fund” is 3 months worth of living expenses in your savings account. The reality however, is that many Americans struggle to come up with $1,000 in an emergency. We at HFLA do feel that it is crucial to develop an emergency fund however, it doesn’t have to happen overnight. A slow and steady strategy will allow you to gradually and reasonably work up to your savings goals.

Observing prudent savings strategies now will make a world of difference once we all come out the other side of the COVID-19 Pandemic.

Take Advantage of  Your Tax Refund in 2 Ways

Luckily for many of us, income tax refunds can provide some much needed “bonus” cash that can be used to stabilize your finances.

1.   Add one month of living expenses to your savings

You just worked out your monthly expenses, so if you can, add that total to your savings now with your tax refund!

Remember to include: rent/mortgage, food, utilities, car note, minimum credit card payments, and insurance. Can you take this amount out of your tax refund? If yes, put that into your savings IMMEDIATELY! If not, try to put a portion of that into your savings and strive to save the rest up throughout the year.

2.   Catch up on collections or due balances

Review your credit report on AnnualCreditReport.com to see if you are behind on any collections or any accounts.

Use your tax refund to give your credit a boost and get caught up on things that are too big to tackle all at once. Consider speaking to a financial coach or financial counselor to help you with clear goals on what debts to tackle first.

3 Tips to Start Saving Without Breaking the Bank!

Some simple ways to start reaching your financial goals, even on a tight budget. 

1.   Make a SMART plan for your savings goal

Let’s say you want to save up one month’s living expenses, equaling $500, in one year.

Your specific goal is to contribute one month’s living expenses to savings measured to be $500 total. Your regularly measured goal equals $42 a month over 12 months. You check, “Is this goal attainable with my current income and expenses?” If yes, stick with it! If no, lower the measurable goal to something that fits within your budget. You ask, “Is this goal relevant, will it help me in the long run?” Yes! You will eventually have one month of living expenses that could be relevant during an emergency! You set a goal date of 12 months to keep your goal time-bound. 

 

 

Once you’ve achieved one SMART goal, make another! Check out this worksheet from Consumerfinance.gov and create your own.

2.   Set up direct deposit and “pay yourself” first

If you haven’t already, set up direct deposit to get your paychecks into your bank account quickly and safely.

Every time you receive a paycheck, “pay yourself” first! Take a predetermined amount from your paycheck and deposit it into your savings account before spending anything! By contributing a small portion of every paycheck into your savings account, you are growing your savings fund at least once a month without having any time to to spend it. Some banks also offer automatic savings that directly takes a designated amount of your paycheck each time. Even $5 a paycheck can go a long way when you stick with it!     

3.     Become a “Brown-Bagger”  

Making the change from buying to packing lunch is definitely a lifestyle commitment, but one that can save you thousands of dollars annually.

One cup of coffee a week can be anywhere from $2-$5 dollars. That alone adds up to at least $100 a year! Getting takeout can be inexpensive, but still at least $5 a day. Make your coffee at home, plan your meals the day before, and put that money back in the bank! Every time you feel the urge to buy food or coffee instead of making it yourself, total up what you are about to spend and put that money into your savings instead. You’ll be amazed to see how much you would have spent!

And most importantly, don’t touch your savings account!

Keep your hands out of your savings account as much as you can. Treat it like it is money only to be spent in an emergency. Schedule dates where you check on it’s growth. You’ll be surprised with how much you’ve put away in such a short time by keeping your hands off and eyes out!     

About HFLA of Northeast Ohio

HFLA of Northeast Ohio was founded in 1904 with $501 donated by Charles Ettinger, Morris Black, and their friends to help European refugees settle and begin productive lives in this country. They believed – as we do now – that if you give someone a chance to succeed, they will pay it back and we can continue this transformative cycle. The same principle guides the organization today. By providing interest-free loans to individuals, families, and small businesses in the Northeast Ohio area, we are able to help people help themselves. The association has drastically increased its lending capital in the past few years from individual gifts, bequests, endowments, foundation grants, memorials and honorariums and is now operating with a loan fund of over $1 million. HFLA is a 501(c)3 non-profit organization. Learn more about HFLA.

Get involved and stay up to date by subscribing to our quarterly newsletter or following us on social media.

by hflaneo

Avoiding Financial Scams During COVID-19

Avoiding Financial Scams During the COVID-19 Pandemic

We are all trying to navigate a “new normal” in our daily lives. It has been inspiring to see how many individuals, small businesses, and families are coming together to lift up their community and strive to make a difference in the lives of those who are facing difficulties. 

Yet, despite this new “distant” community connection, we must still be wary of scams that try to take advantage of the vulnerability and generosity that we see today.

We have some basic tips to keep yourself safe from scammers during these times.

3 Essential Rules:

  1. Do not give your Social Security number, any bank account numbers, or credit/debit card numbers to someone over the phone. You have no way of guaranteeing the identity of whoever is on the other line. 
  2. If someone solicits you for something that you’ve “won,” an investment opportunity, or a “limited time offer,” walk away. If it seems too good to be true, IT IS. 
  3. If you are looking at financing or loan options, look for the Truth in Lending Act within the loan documents. If you are unable to find reasonable interest rates on a personal loan, contact HFLA of Northeast Ohio.

From the Ohio Department of Health: 

  • Robocalls – Never provide personal information such as social security numbers, bank account numbers, or credit card numbers to automated messages. If you think that the message is legitimate, call the organization via a local branch number and speak to a representative. 
  • Emails from the Federal Centers for Disease Control and Prevention (CDC) – Legitimate information is available from the CDC via coronavirus.gov and from the Ohio Department of Health at coronavirus.ohio.gov. 
  • Federal stimulus checks – Updates can be found on the Federal Trade Commission website: https://www.consumer.ftc.gov/blog/2020/03/checks-government – You WILL NOT need to pay money in order to receive your stimulus check, you WILL NOT need to provide social security numbers, bank account numbers, or credit card numbers. DO NOT GIVE THIS INFORMATION OUT.
  • Research charities before donating (that includes us!) – Find a database of registered charities on the Ohio Attorney General’s website: https://charitableregistration.ohioattorneygeneral.gov/Charities/Research-Charities.aspx

If you suspect unfair or deceptive sales practices, contact the office of Ohio Attorney General Dave Yost: www.ohioprotects.org – 1-800-282-0515

Keep up to date with the latest scam alerts on the Federal Trade Commission website: https://www.consumer.ftc.gov/features/scam-alerts

by hflaneo

COVID-19 Resources for Northeast Ohio

COVID-19 Resources for Northeast Ohio

HFLA of Northeast Ohio aims to bring resources that are relevant to the community it serves. This is not a replacement for 211 or existing community resource guides in your community. It is highly suggested you look at and support existing local resources. 
HFLA of Northeast Ohio has not vetted all of these organizations or offerings––these are provided as-is. If you have any comments, or contributions to this list please contact us at team@interstfree.org – subject: COVID-19 Resources. 

For the most accurate and up to date information on the Coronavirus (COVID-19) in Ohio visit the Ohio Department of Health 

Ohio Department of Health | COVID-19 Testing and Community Health Centers

Ohio Vaccine Eligibility

FEMA funeral assistance for those whose deaths were caused by COVID-19

Rental & Housing Assistance

Energy & Utility Assistance Programs

Northeast Ohio Resources

Greater Ohio Resources

Food Resources: 

Small Business Resources

by hflaneo

Cleveland Jewish News: HFLA Offers Expedited Loans

HFLA offers expedited loans up to $1,500 for those impacted by COVID-19

AMANDA KOEHN | LIFESTYLES MAGAZINE EDITOR
akoehn@cjn.org

After Gov. Mike DeWine closed all Ohio schools March 12, the Hebrew Free Loan Association Of Northeast Ohio didn’t waste time enacting an expedited emergency loan program, which loans individuals up to $1,500 interest free.

The next day, the Beachwood-based organization received 60 calls, and the number only increased after bars and restaurants were ordered to shut down in the days following.

The loans are meant for Northeast Ohioans who have been impacted in some way by the COVID-19 pandemic, whether that means loss of income, a sudden need for funds to pay for child care or another need. 

Executive Director Michal Marcus said the organization typically requires a guarantor on loans it offers up to $10,000. For the expedited $1,500 loans, all that’s required to apply is an application and documentation. 

“These are being written directly to individuals because we know if you are a restaurant worker, or in some type of service industry that isn’t working now and you aren’t getting income, you are going to need that money to buy groceries, you are going to need that money to pay a babysitter,” Marcus said. “There are needs where we can’t write it directly to the source of need.”

In the first week of expedited loans, HFLA was able to provide same-day turnaround on the loans once an application was complete and a promissory note was signed. HFLA is using DocuSign so the loans can be signed electronically.

Marcus said because her organization is now working remotely, checks could take three to five days to appear for loans because “it’s coming directly from the bank and we are trying to have as little physical touch as possible.”

In the first week of the program, Marcus said she saw “a lot of anxiety” around the impact of the pandemic and the unknown end date. 

She said the first person to receive an emergency loan was a single mother working at University Hospitals who now needs to pay for child care since her children are out of school. More loans went to those in the restaurant industry, and she’s been contacted by substitute teachers who don’t get paid if they aren’t in school. 

The HFLA expedited loans are generally targeted toward individuals, although Marcus said small businesses are also likely to suffer and need larger loans. 

Marcus also said she was grateful for HFLA’s supporters who have reached out to ask how they can help the organization continue on its path. 

“That has been kind of heartwarming to know – seeing how much people care,” she said. “And we do need it, our funds will run out.”

For more information, visit interestfree.org.

by hflaneo

Coronavirus (COVID-19) Emergency Fund Press Release

FOR IMMEDIATE RELEASE

Michal Marcus (HFLA)

Tel: 216-378-9042

Email: michal@interestfree.org

Coronavirus interest-free loan fund

Cleveland, Ohio (March 12, 2020) –

By now we have all heard about the evolving impacts from the coronavirus (COVID-19) across the globe. For many of us, the effects have shifted from a piece of news to a part of life.

Along with health concerns, there are many unfortunate financial implications: events are being canceled, restaurants are left empty, and people unable to go to work as they live through their quarantine, to name a few. For many working people in Northeast Ohio and the surrounding this can quickly lead to financial crisis.

To meet this need, the HFLA of Northeast Ohio will be offering interest-free loans for those affected economically by the coronavirus who live in Northeast Ohio.

HFLA will provide expedited Interest-free loans of up to $1,500 for purposes including (but not limited to):

  • Lost wages due to being unable to go to work
  • Child care costs due to school closures
  • Related medical costs

To apply, borrowers should contact HFLA at 216-378-9042 or email team@interestfree.org specifying that the request is for coronavirus related needs.

Facebook, LinkedIn , Twitter and Instagram

About HFLA of Northeast Ohio

HFLA of Northeast Ohio was founded in 1904 with $501 donated by Charles Ettinger, Morris Black, and their friends to help European refugees settle and begin productive lives in this country. They believed – as we do now – that if you give someone a chance to succeed, they will pay it back and we can continue this transformative cycle. The same principle guides the organization today. By providing interest-free loans to individuals, families, and small businesses in the Northeast Ohio area, we are able to help people help themselves. The association has drastically increased its lending capital in the past few years from individual gifts, bequests, endowments, foundation grants, memorials and honorariums and is now operating with a loan fund of over $1 million. HFLA is a 501(c)3 non-profit organization. Learn more about HFLA.

###

by hflaneo

What is Predatory Lending?

I  Get It:  Payday and Online Business Loans are Bad – But I Need One!

As a nonprofit that provides interest-free loans, too often we see that our applicants are burdened by what we consider “predatory” loans and credit cards.

Predatory loans or credit cards have excessive interest rates, or interest rates that are much higher than the average. Typical Annual Percentage Rates (APRs) for a credit card can be around 15-18%, whereas predatory credit cards have APRs from 20-29%. A predatory rate for personal or car loans is generally over 18%. These interest rates result in unaffordable payments, excessively long loan terms, and/or debt that seems impossible to get out from under. They are designed this way; for corporations to make money off of lending money.

Predatory lending includes payday and auto title loans. Our Executive Director fought tirelessly with the Ohioans for Payday Loan Reform Coalition to place a percentage cap on payday lending interest rates to stop this cycle of preying on financially insecure individuals. Despite these recent sanctions, Ohioans are still at risk of predatory loan rates. We often see people get into trouble by taking out loans through online lenders that originate outside of Ohio where these sanctions do not apply. Some of these loans bear interest in the triple digits! We have seen interest rates well over 500% from these online loans. HFLA’s program staff helped a woman get out of a loan with a 638% APR just last week.

Before you take out a high interest rate loan, read this article.

Every week, we speak to people who are burdened by high interest predatory loans. We realize that often the only choice that many people have when it comes to getting the financing that they need. For many people, this could be the first time they have ever been able to get financed due to poor credit history, or no credit history.

In their excitement to solve their pressing financial issue, the high interest rate or bi-weekly payment schedule is overlooked.  Predatory lending preys on desperate situations and bad timing. They are financing options disguised and advertised as “good opportunities” to those who have bad credit and even promote “credit building” as a part of the lure. The reality is that they often force people to borrow more than they need, and the repayment can lead to a downward spiral of debt that is almost impossible to get back out of.

Individuals seeking personal loans are not the only ones at risk of predatory lenders. Small business owners have become a new target for high-interest lending. Business loans are typically very hard to get, especially for startup companies. Predatory interest rates–typically found from online lenders–can be up to 49% APR.

Our call to action:  Always be wary of any financing option you apply for.

1. If someone solicits you for a loan or credit card — RED FLAG — this is likely predatory.
    • Someone is trying to seek you out to give you money? Sounds too good to be true! Probably because they are going to make money off of you.
2. Read through the terms and conditions of the loan or credit card you are applying for.
    • Look for the Truth in Lending Act (TILA) in the document. This page will list the amount financed, the finance charge, the Annual Percentage Rate, and what the total amount of the payments will be at the end of the loan.
3. If you are currently having trouble managing your debt or have high interest rates on your loan or credit cards: Seek out help from a free financial counselor or coach today!

Here are some of the financial counseling services offered by nonprofits in the Northeast Ohio Region that we recommend:

  1. Cleveland Neighborhood Progress – communityfinancialcenters.org
  2. ESOP at Benjamin Rose Institute on Aging (for seniors and housing) – esop-cleveland.org
  3. United Way’s Financial Empowerment Center (FEC) – uwsummit.org/FEC
  4. CHN Housing Partners – chnhousingpartners.org

Resources for small business owners:

  1. ECDI (throughout Ohio) & the Women’s Business Center – ECDI.org
  2. Ohio Small Business Development Centers (SBDCs) – clients.ohiosbdc.ohio.gov
  3. SCORE – score.org

About HFLA of Northeast Ohio

HFLA of Northeast Ohio was founded in 1904 with $501 donated by Charles Ettinger, Morris Black, and their friends to help European refugees settle and begin productive lives in this country. They believed – as we do now – that if you give someone a chance to succeed, they will pay it back and we can continue this transformative cycle. The same principle guides the organization today. By providing interest-free loans to individuals, families, and small businesses in the Northeast Ohio area, we are able to help people help themselves. The association has drastically increased its lending capital in the past few years from individual gifts, bequests, endowments, foundation grants, memorials and honorariums and is now operating with a loan fund of over $1 million. HFLA is a 501(c)3 non-profit organization. Learn more about HFLA.

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by hflaneo