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• Alliance for Economic Inclusion (AEI)
• Baltimore, MD

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Goals of the AEI Small Dollar Loan Program

• Build good savings habits
• Improved credit-risk profiles/Establish personal
  credit history
• Eliminate a common source of personal stress
• Obtain personal financial education
• Transition from higher cost to lower cost loans

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Affordable Small-Dollar Loan Guidelines

• Cost-effective, safe and sound.
• Affordability
• Underwriting.
• Financial education and savings,
• Community Reinvestment Act (CRA) credit
• .

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Features

• Targeted to certain markets, such as military
  customers, employers, LMI customers, the
  underbanked, new Americans, or customers with a
  limited or non-existent credit history.
• Developed to address the regulatory
  recommendation.
• The goal is to enable insured institutions to
  profitably serve an underserved market while
  helping consumers avoid, or transition away from,
  reliance on high-cost debt.4

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CRA Consideration for Small-Dollar Loan Programs

• Under interagency guidance, examiners may
  favorably consider small-dollar loan programs
  when evaluating the lending performance
• The Federal banking agencies have emphasized that
  programs that transition borrowers from higher
  cost loans to lower cost loans are particularly
  responsive to community needs
• Small-dollar loan programs may qualify for
  favorable consideration under the community
  development service criteria

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History

• The Baltimore AEI was launched on May 1, 2007.
• Currently has over 40 members.
• Committees include the Asset Building, New
  Americans, Research and Data Collection,
• Collaborative small dollar loan program.
• Baltimore Homeownership Preservation Coalition
• Foundations participation

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Loan Program Model

• The program has three (3) components
• Loan Applicant can borrow a min. of 300 up to
  1,000, repaid over 12 months at 17.99 APR
• Savings Borrower must include in each payment a
  minimum of 5 savings to be deposited in a
  savings account.
• Match After the loan is fully paid off, the
  total savings amount is matched with AEI funds on
  a 1-to-1 basis.
• Financial Education Borrower is required to
  attend two financial literacy classes offered by
  NHS of Baltimore free of charge.

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Foundation Support

• Loan loss reserve
• Focus groups
• Check cashing/payday lending survey
• Marketing assistance
• Grants for payroll
• Grants for loan pool

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Nonprofit Partner Neighborhood Housing Services
(NHS) of Baltimore

• Existing Lending platform/underwriting/loan
  decision making
• Chartered member of NeighborWorks America
• Certified CDFI
• Centrally located
• Existing partnerships
• Name recognition
• History of community outreach
• Providing Loan Loss Reserve

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Current Financial Partners

• Suntrust Bank
• Provident Bank
• BBT
• Municipal Employees Credit Union
• MT Bank
• Hamilton Federal Bank
• Bank of America

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Issue to be Resolved

• More Affordable Interest Rate
• Maximum Saving Amount Qualified for Match
• Loan repayment Schedule-monthly vs. biweekly
• Limit on the number of loans a borrower can take
• Bank Account Set up
• Incentives for completing educational program
• Collection and processing of cash payments