Sarah called in to St. Vincent de Paul’s call center seeking help to purchase a new car. She had two kids and a recently disabled partner who was no longer able to work. With little income due to medical bills, she was suddenly the sole provider for her family of four.
To make ends meet, Sarah was actively applying for jobs. She desperately needed a new car because her current car was in such poor condition it was unable to be repaired. Without a car, Sarah could not get to and from a job, or to the grocery or to her partner’s doctor appointments.
She was hopeful that St. Vincent de Paul could help.
Through the support of a new program, the St. Vincent de Paul Microloan Program, they could help address Sarah’s challenge. In partnership with Kemba Credit Union and the Butler Foundation, the Microloan program is enabling SVDP to offer unbanked individuals with an effective alternative to high-interest predatory loans and to provide a personal finance learning opportunity and financial mentorship for our neighbors in need.
An unexpected expense, such as a car repair or house repair, can threaten the well-being of a family living paycheck to paycheck. Most served by SVDP live below the poverty level and face financial hardship due to health problems or disabilities, unemployment or underemployment.
These individuals may be unbanked and have poor credit, leaving few alternatives to find a way to cover the cost. In some instances, they may sacrifice a basic necessity to meet an obligation, leaving them short on food, rent or utilities. In other instances, these individuals reach out to high interest, predatory quick loan establishments that only add to their financial strain or debt trap, not solve it.
Now SVDP can offer an option that provides encouragement: a low-interest loan fully guaranteed by SVDP NKY.
The Microloan applicant will be referred by a Vincentian volunteer and could be in need of retiring an existing predatory loan, or for help with car, medical, educational, or home repair expenses.
The loan is structured to fit within the applicant’s financial constraints, as long as the recipient agrees to work with a Vincentian financial mentor over the term of the loan. While the Microloan Program is a new initiative for SVDP NKY, this program has been vetted successfully through St. Vincent de Paul in several cities including Columbus, Lancaster, Dallas, and Arlington.
The hope for the program at SVDP Northern Kentucky is to empower a person who has struggled financially and affect systemic change in the NKY community.
Deacon Mike Lyman weighs in on the many positives of the program, noting that “these loans have provided the opportunity to address immediate needs such as car repairs and retiring predatory loans.
“The program does much more than that though. For our neighbors, they offer the opportunity to grow in confidence and financial skills. For our Vincentians, they are blessed with the opportunity to enter into extended relationships with our neighbors, which allows them to influence lives in a substantial way. The money made available is helpful, but the hope generated, and the mentoring support provided are the true riches of this program.”
This program has provided success to Sarah and the mentoring she has received from a Vincentian has given her financial hope. She is successfully paying back her Microloan and upon repayment, plans to continue to pay the loan payment to a savings account to build a cushion for the future.
