What is a Micro Bridge Loan?A Micro Bridge Loan (MBL) is a loan of up to $300 to help a member of a community stay on their feet – to fix a car to continue working, to help pay rent to keep shelter, or to pay utility bills during a short-term financial crisis. These small non-interest bearing loans are designed for people who are willing and able to repay, but who need a little help to keep from slipping into a financial hole – one that may take twice as much time and money to dig out. A Micro Bridge Loan has the following features:
i. The loan carries 0%. Terms are up to 6 months with a monthly repayment plan.
ii.We do, however, require an upfront processing fee of 5% of the loan. For example, a $300 MBL with a 6 month term will require a $15 upfront payment and carries an effective APR (annual percentage rate) of 10.14%. This is much better than the market will offer such borrowers and provides a viable alternative to Payday Lenders, who can charge an APR of up to 400 % and lead to a cycle of debt.
iii.Once the processing fee is received in our account, we will issue the loan. We recommend that borrowers set up an automatic payment plan from their checking account. If they do not have a checking account, we can work with a local bank to set one up. It's all part of our program to help people enter the financial system in a productive way.
iv.MBLs are not issued directly to the borrower. Instead, we will cut a check to the creditor/vendor, such as a car repair shop, public utility or landlord. In this way, we can ensure that the money is used for its stated purpose. Return
What is meant by a Sponsor?A Sponsor is any organization, individual or business that funds the Micro Bridge Loan program. A sponsor may be actively involved in identifying a specific community group or institution to be helped. If the sponsor wants to take a more passive role, C2P will take responsibility. We work with the sponsor to develop a program that best serves the people and community in need. Return
Can a company be a Sponsor?Yes. Companies can facilitate a Micro Bridge Loan program to support their employees through times of trouble, so they need not resort to payday lenders or other high stress options that can lower job productivity and satisfaction. Contact us for details. Return
What is meant by a Partner?A partner is typically a local institution (such as a senior center or community group) that serves people who need an MBL from time to time. The Partner will typically nominate the loan candidate, facilitate the loan process, and actively encourage the borrower to repay the loan on time. In essence, our Micro Bridge Loans provide a tool for local non-profit organizations to serve their clients - e.g. to help them remain financially stable while receiving other important social services. Return
Are Sponsors or Partners financially liable for repaying the Micro Bridge Loan?No. Partners do work with the borrower to guide and encourage him or her to repay the loan. This role is very important. C2P will work with all partners to make sure you have the training and tools needed to help your clients and employees succeed with their loans. NOTE: Loan recipients who fail to repay any portion of a Micro Bridge Loan face a negative report on their credit history. Return
What is your Screening Process for lending to an individual?We have several steps.
i.First, the partner will recommend the individual based on what they know of their character. C2P recommends that partners take this step seriously – as the viability of the program depends on repayment of the Micro Bridge Loans.
ii.Second, C2P recommends that all individuals be formally associated with the Partner organization for at least 1 year.
iii.Third, the individual must complete an online application form (the partner organization may assist with the application). The application form asks for a range of information - click here to see a sample page. Once you are registered as a partner, we will provide you with access and training on the form. Return
How do you encourage repayment?C2P has several approaches:
i.We use a quick, but thorough screening process that includes both the Partner recommendation and follow-up concerning the information that the borrower provides with the online application - such as employer, bank account and reference.
ii.As part of the application process, loan recipients must confirm their commitment to repay. Non-repayment will result in a negative credit report by C2P.
iii.The host bank or credit union may pursue the individual by any means that it deems legal and appropriate – C2P can help in this regard. A payment default will go on the individual’s record and will have a negative impact on future loan applications.
iv.If the person wants to remain as a member in good standing of the community or business, he or she will feel pressure to repay. As has been demonstrated in micro-loan programs throughout the world, peer pressure is one of the most powerful forces compelling people to repay loans. Here, the Partner plays an important role in encouraging individuals to repay.
v.If a business is participating in the Micro Bridge Loan program, C2P can arrange to garnish wages on a pre-tax or after-tax basis, which helps to ensure repayment. A departing employee will usually give two weeks notice – the full repayment of the MBL can be collected during this time.
vi.Finally, C2P purposely keeps the MBL amounts small – up to $300 – and have found that people are not likely to damage their credit, their community standing or their jobs over such a small amount. Return
Must loan recipients be members of an official community group or business to receive a Micro Bridge Loan?No, but it’s recommended. We can work directly with a borrower to complete the online application and conduct the screening process. C2P does not discriminate in any way when issuing a Micro Bridge Loan, but we do reserve the return to deny an application based on information (and our follow-up) provided by the borrower. Return