Exodus Lending is breaking the cycle of payday loans

Posted Tuesday, November 22, 2016 2:42 pm

By MARGIE O’LOUGHLIN

Payday loans are getting a lot of attention these days. A payday loan is a small, short-term, unsecured loan taken out to cover an emergency, and it’s meant to be repaid with the next paycheck. However, the interest and fees charged are almost always exorbitant—and can create a cycle of debt that is very hard to break.

Exodus Lending has been helping borrowers trapped by payday lending since it opened its doors 1½ years ago. The brain-child of Holy Trinity Lutheran Church (HTLC) in the Longfellow neighborhood, its two-person staff has guided over 100 participants on the path to financial stability.

Photo left: Until consumer banks and credit unions offer an affordable, small-dollar loan product, people will continue to use payday lenders like ACE Cash Express at 27th and E. Lake St. Exodus Lending hopes to serve 200+ clients in 2017, seeking lasting change for individuals, financial institutions, and society at large. (Photo by Margie O’Loughlin)

In the words of Sarah, an Exodus Lending graduate: “Even though I worried that it wasn’t the best solution for my money problems, I took out a payday loan. I couldn’t afford to pay back the loan when it came due, so I found myself taking out another loan to pay off the first loan and its fees. I never thought I’d be stuck in the same cycle a year later—but there I was.”

Exodus Lending asks the following eligibility questions: Do you live in the state of Minnesota? Do you have a balance on a payday loan that is less than $1,000? Have you had the loan for more than 30 days? Do you have a job?

Exodus Lending program manager Kathy Dixon may be able to offer financial assistance if the answer to all four questions is yes. She can be reached at 612-615-0067 to schedule an appointment, and the office location will then be disclosed.

HTLC’s parish organizer Megan Olsen Biebighauser explained how Exodus Lending came to be. She said, “My job as parish organizer is to listen deeply to those within this place, and in the larger parish beyond. We use the word parish in the old-fashioned way here, incorporating the neighborhood as well as the church community. With a small army of volunteers, we shared hundreds of conversations about what people found hopeful in our neighborhood, and what they found troubling.”

“Repeatedly we heard that people were bothered by the presence of two payday lending shops in proximity to HTLC,” Olsen Biebighauser said. “Cashwell, at 3018 E. Lake St., relocated a few months ago but ACE Cash Express, at 2701 E. Lake St., is still going strong.”

Most people who come to Exodus Lending have been trapped in the cycle of debt for months, usually originating from a loan of $500-$600. People who fall prey to payday lending are not the poorest of the poor—they’re people who are working paycheck to paycheck and coming up short.

Olsen Biebighauser explained, “Our participants often come in filled with all kinds of shame. It’s quite common for people not to even have told their spouse about their debt cycle. For us at HTLC, it’s a clear-cut issue spiritually. We believe it’s unethical to charge exorbitant interest rates, and most especially to those who are already poor.”

Exodus Lending can work with eligible clients anywhere in Minnesota, though most participants live in the Twin Cities metro. If a person meets the program criteria, Exodus Lending will pay off their payday loan balance if it’s less than $1,000. The participant then has 12 months to repay the loan to Exodus Lending at 0% interest and no fees.

Participants are also referred to three sessions of financial counseling at Lutheran Social Services.

If they’re able to save a minimum of $400 over the 12 months of their repayment term, Exodus Lending will give them an additional $100 as an incentive to keep saving.

The name Exodus Lending suits the program. “Our congregation connected with this image of God’s people moving together out of the bondage of debt,” Olson Biebighauser explained. A circle of generosity has continued to wrap itself around Exodus Lending since its beginning.

A couple of years ago, HTLC applied for a $40,000 social entrepreneurship grant from the Colonial Church of Edina and won. That generous gift proved to be the seed money for starting Exodus Lending, and its coffers have grown steadily with donations from individuals, HTLC, and other congregations, and grants.

HTLC has also provided fiscal sponsorship. Exodus Landing will soon be a separate non-profit organization with its own executive director: Sarah Nelson-Pallmeyer.

“This program has changed the lives of its participants," Olson Biebighauser said, "and also the workings of our church. People within the church are more candid now about their own financial struggles. They feel safer talking about what their safety nets are—and what they aren’t. We’ve become much more thoughtful about the way we support each other and our broader parish community.

To make a contribution toward breaking the debt cycle of the working poor, visit www.exoduslending.org.