Economic Justice Fund Receives Federal Small Dollar Loan Program Grant
Sacramento, Calif. (April 16, 2024) – Today, the Economic Justice Fund was awarded a $199,276 grant by the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund). The grant was made through the combined fiscal year 2023 and 2024 round of the Small Dollar Loan Program (SDL Program).
The Economic Justice Fund will utilize the grant to scale its Equitable Opportunity Loan to originate fair and affordable small dollar loans tailored to meet the needs of low-income borrowers. The Equitable Opportunity Loan offers fee-free financing, low fixed interest rates, terms of 12-36 months, and character-based underwriting to approve borrowers that traditional lenders do not. In addition, the Equitable Opportunity Loan provides free credit-building services to empower each borrower to build a strong financial foundation to achieve their goals.
“These important awards enable more Certified CDFIs to offer alternatives to costly payday lenders…” said CDFI Fund Director Pravina Raghavan. “With a quarter of unbanked or underbanked American households, our program aims to broaden access to affordable financial products and services. These awards significantly boost access to small dollar loans in underserved communities.”
Egregious payday lenders plague California. Check cashing services, auto title loans, and other high-interest predatory financial products undermine the financial health of low-income Californians. The California Department of Financial Protection and Innovation recently published an alarming report about payday and predatory lenders that found the following:
- In 2022, 5.3 million payday loans were made to California borrowers, totaling more than $1.5 billion. These transactions represent an increase of 18.4% and 19.2% from the 2021 totals.
- More than 900,000 individual customers took out payday loans, a 13.9% increase from the 2021 total.
- Subsequent loans by the same borrower accounted for 69.2% of the payday loans in 2022 and 79.5% of the aggregate dollar amount.
“The Economic Justice Fund is committed to combating payday and predatory loans that trap low-income Californians in a vicious cycle that undermines their financial opportunity,” said Scott Berman, chief executive officer of the Economic Justice Fund. “We are honored to be selected by the CDFI Fund for this award, which acknowledges the innovative and impactful work being accomplished through the Equitable Opportunity Loan.”
To date, the Equitable Opportunity Loan has served truly underserved borrowers:
- 100% are low-income, very-low-income, or extremely-low-income.
- 82% identify as Black, Indigenous, and people of color (BIPOC).
- 68% are women with an average household size of 3-4 people, the majority young children.
To apply for an Equitable Opportunity Loan, please visit www.economicjusticefund.org/apply.
The Economic Justice Fund’s mission is about more than making loans—it is about transforming lives. Testimonials from borrowers who have benefited from our loans and their inspiring success stories can be read here.
ABOUT THE ECONOMIC JUSTICE FUND
The Economic Justice Fund is a mission-driven Community Development Financial Institution (CDFI) dedicated to empowering individuals, families, and entrepreneurs to achieve their dreams. We provide affordable financing solutions through innovative financial products, character-based lending, credit-building services, and an unwavering commitment to our mission.
Our loans have low fixed rates, no application fees, no origination fees, no servicing fees, and no prepayment fees. We also offer flexible terms and underwriting to meet the needs of a wide range of borrowers. For more information, visit www.economicjusticefund.org.