From Urban Institute --

The Community Loan Center (CLC) Small Dollar Loan Program was created to offer workers an affordable alternative to high-cost credit. Developed by the nonprofit come dream. come build. and its community development financial institution partner in the Rio Grande Valley of Texas, the program provides employer-sponsored loans of up to $1,000 with effective annual percentage rates below 22 percent (much lower than a typical payday loan). Payments are made by automatic payroll deductions to reduce risk for lenders and improve access for borrowers. Since launching in 2011, CLC has developed into a franchise model, issuing more than 117,000 loans to more than 35,000 borrowers across multiple states.

Why This Matters The CLC Small Dollar Loan Program offers important insights for employers, lenders, and policymakers seeking to expand access to affordable credit. The approach differs from traditional small-dollar lending by (1) delivering loans as an employer-sponsored benefit with no credit requirements, reducing barriers to uptake, (2) structuring repayment through automatic payroll deductions, which lowers risk for lenders and simplifies repayment for borrowers, and (3) offering more affordable terms than payday loans. The program demonstrates that it is possible to meet borrowers’ short-term financial needs with a sustainable, lower-risk loan model that benefits both employees and employers.

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