Sunday January 7, 2007
A few hundred dollars can change lives
By Meera Pal
CONTRA COSTA TIMES
Having done international work in economic development, Steve McCoy-Thompson has seen the concept of microcredit drastically change the lives of the poor in Asia and Africa.
While in Bangladesh, McCoy-Thompson was in contact with the Grameen Bank, established by 2006 Nobel Peace Prize winner Muhammad Yunus. The Pleasanton man saw how something as simple as credit could break the cycle of poverty.
McCoy-Thompson was inspired to establish a similar program in his community.
But instead of offering loans of thousands of dollars, he wanted to fill in the cracks for those who simply need a few hundred dollars to prevent them from spiraling into financial ruin.
"There's a saying that millions of people are a paycheck away from bankruptcy," he said.
Last year, McCoy-Thompson and local CPA Jim Pease founded Community to People, which provides "micro" bridge loans to community residents.
"When someone is in a financial emergency and needs help immediately, the way things work currently, there is nowhere for them to go," said Pease, who serves as treasurer for the organization.
Community to People works with community group sponsors, such as Eden Council for Hope and Opportunity and Tri-Valley Interfaith Poverty Forum, to identify individuals who qualify for no-interest loans of as much as $500.
Typically, the loans are used to pay rent, utility bills or other one-time pressing needs. McCoy-Thompson said the idea is to prevent the working poor from losing their homes because of a one-time car repair bill or a financial hit caused by an illness.
"This is a 'microloan' to help people create a bridge over a financial chasm for the short term," he said.
McCoy-Thompson actually launched the idea of a communitywide "micro" bridge loan program in 2003 with a $5,000 donation from the Catholic Community of Pleasanton. That program waned when he and his family moved to India for a year. Upon his return, he was motivated to establish a nonprofit organization dedicated to providing "micro" bridge loans.
The church-based program did successfully loan money to 12 individuals, helping them to keep their apartments or stay at work, McCoy-Thompson said. And, loan repayment rates were close to 100 percent.
"I've received letters from people thanking us, and from organizations that tell me they had no other resources to help their clients," McCoy-Thompson said.
When a longtime member of the Tri-Valley Interfaith Poverty Forum called Maurine Behrend, its executive director, to say she was in danger of being evicted, Behrend turned to McCoy-Thompson. He not only provided guidance but also suggested a "micro" bridge loan.
"She was able to keep her apartment for two more months, which gave her enough time to make other arrangements," Behrend said. The woman who called Behrend is now making payments on the loan.
Behrend and the UNCLE credit union, which administers the loans, will work with the woman to ensure on-time payments.
The Livermore-based credit union processes the loans and oversees allocation of the money but receives no benefit. It is done as a community service, said Jim Ott, president and CEO of UNCLE.
When a loan is repaid, the credit union issues a letter congratulating the individual on successful repayment. Although repayment of a "micro" bridge loan does not affect credit history, the letter can be used to show attempts at rebuilding credit.
"Typically, these are people who would not qualify for a loan from the bank or the credit union," Ott said.
McCoy-Thompson and others in the organization say they hope to encourage more credit unions around the Bay Area to take on making "micro" bridge loans. It's a concept, after all, for which the 2006 Nobel Peace Prize was awarded.
They are in talks with people in Santa Cruz and Florida, who are interested in establishing "micro" bridge loan programs in their communities.
Meera Pal covers Pleasanton. Reach her at 925-847-2120 or firstname.lastname@example.org.
For more information on Community to People, visit http://www.c2people.org/