Low-income microloan program expanded

  • Clare Higgins

Staff Writer
Published: 5/24/2019 5:20:19 PM
Modified: 5/24/2019 5:20:05 PM

It’s going to be easier for county residents with lower incomes to get a small loan to help with unexpected expenses, now that Community Action Pioneer Valley has expanded its short-term, no-interest loan program.

With the help of Greenfield Savings Bank, the anti-poverty agency announced Friday that residents of Franklin County can apply for a microloan through the expanded program, which was working exclusively with Montague residents since May 2018.

Last year, GSB gave the agency $10,000 to get the program off the ground, and added another $5,000 on Friday to keep it going and growing.

“Thank you to Community Action and Greenfield Savings Bank for recognizing this is such a challenge in our communities,” Rep. Natalie Blais, D-Sunderland, said. “You’re helping our neighbors who are struggling most. And, there’s no hidden fees, no high interest rates, no ‘gotchas.’”

The local bank gave Community Action the money as a grant last year when it identified a problem — banks, by law, can’t give loans of $500 or less, and it was finding many people in need of just that for different emergencies.

So, Community Action Executive Director Clare Higgins said the bank looked to the nonprofit to handle the loan program and contributed to it to get it off the ground. She said at least 40 percent of the population across the nation can’t come up with even $400 for an emergency.

Greenfield Savings Bank Chief Operating Office Denise Coyne said the bank’s motto is, “Care, Connection, Community,” so the collaboration made sense.

“People are living paycheck to paycheck and need help,” Coyne said. “This year we’re giving another $5,000 because we want to see this program keep going. We love supporting nonprofits and enriching people’s lives.”

Higgins said people don’t realize that a small amount of money, like a $500 loan, can make a big difference when someone needs money for a car repair or broken water heater and doesn’t have any in savings. She said the small loans are about building trusting relationships with the most vulnerable people in the county’s communities.

“People will feel like they have a place to go,” she said.

People can ask for up to $500, interest-free, and all they have to do is pay it back within a year and accept financial counseling from Community Action. Once a person’s loan is paid off, that money can be loaned to someone else.

Higgins said that means people don’t have to turn to high-cost options like payday loans and deposit advances or find themselves in a bank overdraft situation.

Bank and Community Action leaders said they hope this prompts others and other area banks to contribute to the loan program, so that there’s plenty of money to keep it sustainable.

“I hope this type of program goes statewide,” Blais said. “I’ll make sure my colleagues know about it.”

Some of the people who have used the loans since the program began last spring include a senior who used the money to pay for a tooth extraction, a working single father who paid back rent, a veteran who replaced one of his appliances, a man who got his van repaired and a single mother who paid for summer child care expenses.

Eligible applicants must live in the county and show verifiable income that doesn’t exceed 300 percent of the federal poverty rate. Once approved, a borrower can then sign a loan agreement and commit to financial coaching throughout the life of the loan.

Higgins said she’d love to see the program expand throughout the Pioneer Valley.

In addition to financial coaching, Community Action also offers close to 40 programs that address the needs of low-income residents, including fuel assistance, Head Start and Early Head Start, youth and family services, food pantries and more.

You can reach Anita Fritz at: afritz@recorder.com or 413-772-0261, ext. 269

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