On Thursday, Sept. 3, U.S. Senator Chris Coons spoke at a virtual event that aimed to raise awareness of a nonprofit resource for Delawareans who don’t have enough savings and have significant, unexpected expenses due to COVID-19 or other financial hardships.
The nonprofit Capital Good Fund, a U.S. Treasury-certified Community Development Financial Institution, or CDFI, offers a few types of unsecured personal loans to individuals and families. Many customers are low-income families and immigrants who might not have many options to deal with financial emergencies; however, Capital Good Fund is seeing an increase in middle-class demand for their services. These loans are an alternative solution to payday lenders and car title companies that often charge 500 percent interest or more.
“Delaware is a state that has a particularly strong payday loan lobby and industry,” Capital Good Fund Founder and CEO Andy Posner said. “In 2018, 75,000 residents took out a payday loan or a similar type of predatory product. The average interest rate – and I had to double check this – is over 500 percent there. You can get a payday loan as high as 3,600 percent in the state of Delaware.”
“We’re in the middle of three different crises right now that makes their work more relevant than ever,” Sen. Coons said. “We are, of course suffering through the greatest public health challenge in a century – the pandemic that has shut down so many states and so much of our economy and has thrown millions out of work.”
Since the COVID-19 crisis began, Capital Good Fund has financed over 600 COVID-19 Crisis Relief Loans of $300 to $1,500 with a five percent APR and a three-month deferment period and put 12 percent of its active borrowers on deferment plans.
During the Sept. 3 virtual event, Posner talked about how Coons helped bring CGF’s resources to Delaware with funding assistance from Discover and the Longwood Foundation. Another CDFI that serves Wilmington, Stepping Stones Community Credit Union, hosts CGF’s staff in Delaware.
Capital Good Fund has locations in Rhode Island, Delaware, Florida, Illinois, and Massachusetts — with plans for expansion into Texas this year. The nonprofit organization has financed more than 5,500 loans for about $11 million with a 95 percent repayment rate and provided 1,600-plus families with financial coaching throughout the United States.
The CDFI nonprofit is one of the few CDFIs focused on individual consumers/families, and making small-dollar, easily accessible, and unsecured loans.
According to Capital Good Fund, the loans, which range from $300 to $25,000, are regularly used for crucial needs such as vehicle purchase, repair, or refinance; immigration expenses; security deposits; energy-efficiency upgrades; responding to emergencies or crises, and catching up on rent/utilities.
Capital Good Fund and its local community partners hope that the Sept. 3 virtual event will help more people learn about CGF’s inclusive loan products as an option for Delawareans — citizens and immigrants – facing difficult financial decisions.