MADISON, Wis. (7/16/14)--Filene Research Institute announced Tuesday that its new small-dollar loan product, which aims to benefit low- and moderate-income workers, will be tested at 13 credit unions and one community bank located throughout the country.
Called the Employer Sponsored Small Dollar Loan, loan amounts range from $300 to $1,500 and are available to workers at their places of business. Loans are based on tenure, rather than the individual's credit score, and the terms last six months to ease the burden on the employee's cash flow, according to Filene.
Loans also aren't reported to credit bureaus.
This product will "create a partnership between employers and credit unions so that we can better support the financial needs of employees, and in turn improve the turnover, tardiness and absenteeism rates for employers since they are often tied to employees with financial stress," said Cynthia Campbell, Filene director of innovation.
The financial institutions participating in the pilot are:
- Fitzsimmons FCU, Aurora, Colo., with $167 million in assets;
- CU of the Rockies, Golden, Colo., with $89 million in assets;
- Denver Community CU, with $264 million in assets;
- Metrum Community CU, Centennial, Colo., with $57 million in assets;
- SEFCU, Albany, N.Y., with $2.8 billion in assets;
- Spring Bank, Bronx, N.Y.;
- Holy Rosary CU, Kansas City., Mo., with $19 million in assets;
- Promedica FCU, Toledo, Ohio, with $51 million in assets;
- Toledo (Ohio) Urban FCU, with $4.6 million in assets;
- Toledo (Ohio) Metro FCU, with $39 million in assets;
- Sun FCU, Maumee, Ohio, with $508 million in assets;
- Commodore Perry FCU, Oak Harbor, Ohio, with $34 million in assets;
- Cy Fair FCU, Houston, with $199 million in assets; and
- NorthCountry FCU, South Burlington, Vt., with $447 million in assets.
The product initially was submitted by NorthCountry FCU to Filene's accessible financial services incubator, which is funded by the Ford Foundation.
NorthCountry has already piloted the product and experienced success, prompting the program to be expanded to 14 financial institutions.