Payday/High-cost Loans

Groups Urge Significant Changes be Made to the CDFI Fund Small Dollar Loan Program

CFA joined the Center for Responsible Lending (CRL), National Consumer Law Center (on behalf of its low income clients) (NCLC), NAACP, Americans for Financial Reform Education Fund, and Public Citizen in comments on the CDFI Fund (Fund) Small Dollar Loan Program (SDLP). Although, we support efforts to promote affordable and responsible small dollar loan programs, we urged that any funding be tied to strict criteria in order to exclude high-cost loans or loans with high-risk features. Unfortunately, the CDFI designation is not sufficient to ensure that loans will be affordable and responsible. Most critically, we urged that the Fund (1) limit SDLP grants to programs priced at the lower of 18% APR – with limits on fees outside of the APR to prevent evasions – or the state interest rate limit; and (2) limit eligibility to lenders whose portfolios do not include loans exceeding the lower of a fee-inclusive 36% APR or the state interest rate limit. We also urged the Fund to limit high-risk features and aggressive debt collection practices.