City of Dallas unveils affordable payday lending program

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Borrowers don't have to spend stacks of cash on payday loans. The city of Dallas has launched a small-dollar loan program with lower interest rates.

Korri Kezar

Staff Writer- Dallas Business Journal

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The city of Dallas announced Wednesday the launch of the Community Loan Center of Dallas, a nonprofit that provides an affordable alternative to payday loans.

Small dollar loans of up to $1,000 will be distributed to Dallas County residents though Business & Community Leaders of Texas. To receive a loan, borrowers must pay a $20 administrative fee, have been employed for the previous three months, be at least 18 years old, have valid photo identification, provide four personal references and have a deposit account at a financial institution. No collateral or credit checks are required.

The loans have an 18 percent interest rate, much less than other loan rates, which can reach 800 percent on a $500 loan, officials said.

The money can be repaid within a year, rather than the standard payday loan term of two weeks, and payments are made through payroll deductions.

"If someone needs money, they don't have a choice," said Tennell Atkins, Dallas' mayor pro tem. "Today, they have a choice other than payday lenders."

CLC is part of an effort to pull families out of the cycle of debt. Payday and auto title loans are the highest-cost items among Texans, who paid $1.4 billion in fees and interest last year.

Funding is being provided by Citi's Community Development program. Dallas is one of 10 Texas cities awarded support by Citi.

The CLC program first launched in 2011 in the Rio Grande Valley. In its first three years, the program made 3,400 loans totaling more than $3 billion in the region.

Korri covers banking, finance and nonprofits for the Dallas Business Journal. Subscribe to our email newsletters.