Georgia Heritage Partners with Step Up Savannah and CCCS to Create Small Dollar Loan Program

Staff Report From Savannah CEO

Thursday, July 16th, 2015

Georgia Heritage has recently partnered with Step Up Savannah and CCCS to create a new employer based credit building product.  GHFCU got involved with this program not only to help steer consumers to safer, lower cost loans but also to help address the high numbers of unbanked in our community and ultimately help those employed to improve their credit scores.  Improved credit scores will ultimately lower the cost of other services utilized by these same consumers given that service providers are pricing their services based on the consumers credit scores.

Why are we reaching out to employers?  Here are some of the reasons:

· 81% of workers state that financial problems have affected their productivity;

· 39% of workers who are concerned about their finances spend at least 3 hours each week either thinking about or dealing with their financial problems at work;


· Employers can help steer employees away from high-cost alternative financial products;

· Employers can offer this as an employee benefit at no cost to the employer.  It also engages the employer to the employees financial needs and offers a solution thus building employee loyatly;

· It reduces the employees request on employers to make 401K advances and payroll advances;

· Significant cost savings through reduced employee turnover by retaining employees that might otherwise be absent or have to quit due to financial stress.

How it works:

· Employees can apply for a loan of $300 - $1,500 from GHFCU;

· The employer acts as the conduit as loan applications are submitted through the participating employer’s HR department;

· The HR department simply verifies that the employee has been employed for at least 6 months and is in good standing with no probationary problems;

· Participating employer HR department submits the application to GHFCU with either a loan request;

· GHFCU establishes an account for the employee and in most cases can fund the loan request within 24 hours of the receipt of the application;

· Loan can be paid back either by cash payments or payroll deduction.  A discounted rate of 16.9% APR is offered for payroll deduction.  There is no loan application fee and this is a simple interest loan.

· Payments are reported to the credit bureau thus helping the employee to build a positive trade line to increase their credit score;

· These loans are underwritten on the basis of the borrower’s ability to repay, not their credit score, which provides employee the access that is not otherwise eligible for this type of product

· Ideally, once the loan is repaid, the payroll deduction (if they have chosen the payroll deduction method) will continue to come to GHFCU and go into the employee’s savings account thus creating their own emergency fund for future use eliminating the need for another loan.