Posted on Wed, Sep. 08, 2004
Microloans come home to Pleasanton
By Sam Richards
Steve McCoy-Thompson saw it at work in Bangladesh.
Visiting there in his role as an organizational consultant, the Pleasanton man learned of a program that offered the poorest of the poor "microloans" to help start businesses and jump-start new lives.
McCoy-Thompson brought the idea home with him and last year, with $5,000 from the Catholic Community of Pleasanton, the church's Social Justice and Community Outreach Committee began its own loan program.
Offering no-interest loans of $500 or less, the committee's loans are designed to help people in short-term emergency situations get over a financial hump. The main idea there, McCoy-Thompson said, is ultimately to keep people from losing their homes over a one-time financial emergency, like a big repair bill or other unexpected expense.
The program is the first of its kind in the Bay Area, and possibly the United States.
"If you keep people from sliding into homelessness with these loans, keeping them afloat, that's of great benefit to the wider community," said McCoy-Thompson.
Elizabeth Biggs was glad to get a $500 loan from the church last year when the transmission on her 1989 Plymouth Reliant died. A 65-year-old Pleasanton resident who gets by on Social Security, Biggs had few options.
"It was either come up with the money or be without a car," said Biggs, who learned of the church's Micro-Bridging Loan Program through a reference from the St. Vincent de Paul Society.
"And those repair shops don't take payments," said Biggs, who said she just paid off the last of the loan. "Boy, did I appreciate that money."
The loans are unusual in several ways. Commercial lenders have some programs designed for low- to moderate-income borrowers, but they aren't interest-free, and they involve thousands, and not hundreds, of dollars. Their speed in getting going -- designed to be just a few days -- also sets the Pleasanton program loans apart.
"This doesn't really fit any model of what I've seen before," said Jim Ott, CEO and president of the Livermore-based UNCLE credit union. His office administers these loans -- only seven have been made so far -- as a community service, he said. Such small loans, interest-free, have no bottom-line appeal to commercial lenders.
Also, McCoy-Thompson said they are designed for people who don't necessarily have a good credit history. Still, ability to repay the loans is a key criteria for approval, he said, and loan applicants are pre-screened by Eden Council for Hope and Opportunity, with offices in Alameda County and in Oakley. ECHO already administered a revolving loan fund helping Alameda County CalWORKs families with move-in deposit loans for local moves.
Another unusual aspect is that the borrowers don't get the cash. Rather, a car repair shop, landlord or other service provider gets the money directly from the credit union, in the name of the loan applicant. In some cases, vouchers for goods or services may be approved.
"We want to be sure the money's used for what people claim it's going to be used for," McCoy-Thompson said.
The microloans are but one of 40 or so outreach efforts at Pleasanton's two Catholic churches, said the Rev. Dan Danielson of St. Augustine's. As with many Catholic churches, money is set aside for various social justice and other causes both within and outside of its own parish.
People most in need of such loans are generally even more "invisible" in relatively affluent areas like the Tri-Valley than in other places, Danielson said, making such outreach that much more important.
"We see this as a particularly good example of something we try to do on a regular basis," said Danielson.