The following testimony was delivered to the Interim Financial Institutions and Insurance Study Committee on August 15 by Indiana Assets & Opportunity Network Manager Logan Charlesworth. To view the recording of the hearing,click here.

Members of the Committee,

Thank you for the time to discuss this important issue with all of you. My name is Logan Charlesworth and I manage the Indiana Assets & Opportunity Network, a network of organizations dedicated to increasing asset acquisition for low-income families across the state.

As you may remember from the past legislative session, many different groups, including human service agencies, veterans’ groups, churches and faith-based groups of all denominations and creeds, community development organizations, and more came together to oppose the expansion of short-term loan products in our state. Since the spring, our group has swelled to more than 100 members.

For the sake of time and brevity, I’ll refrain from listing all of our group’s members. However, I will highlight a few from the list I’ve provided all of you with, including: AARP Indiana, the Indiana United Ways, Indiana Military & Veterans Coalition, the Friends Committee on Legislation, the Indiana Catholic Conference, Prosperity Indiana, the Indiana Community Action Association, the Indiana NAACP, the Indianapolis Urban League, and the Indiana Coalition for Human Services, to name a few.

You may also remember the Community Loan Center model offered by Brightpoint in Northeast Indiana and Homestead Consulting Services in West Central Indiana. The Community Loan Center (CLC) is a safe, affordable employer-based loan program that offers loans at 18 percent interest (plus a $20 origination fee). Depending on their income, employees can borrow up to $1,000 and pay it back over the course of one year through payroll deductions. All the while, they are building up their credit in a safe, responsible manner and have access to free financial counseling.

Since the last legislative session, we have added a Community Loan Center in Northwest Indiana and are in talks with several organizations to become CLCs in Southeast Indiana, Southwest Indiana, and Central Indiana. It’s also important to note that more states are beginning to take note of the Community Loan Center, with CLCs now operating in Alabama, Arizona, Maryland, Missouri, North Carolina, South Carolina, Tennessee, and Texas.

In addition to nonprofits becoming Community Loan Centers, churches across the state are putting their faith into action by lifting up families whose finances have been decimated by predatory lending practices. According to LendJustly, 35 percent of clergy and service providers who know individuals with payday or car title loans have provided money to pay these loans off or refinance these loans.

Because of growing concerns about the impact of financial distress on the workforce, we’ve also seen employers increasingly step into this space with incentives and vehicles to build savings and promote short-term financial stability. For example, Walmart offers the Even app which does both budgeting and free paycheck advances. The options I’ve highlighted are just a few of the credit counseling and safe loan products available to Hoosiers today. I encourage you to review the document with the heading “Alternatives to Payday and Other High-Cost Loans” for more information.

The products and aide offered by employers, nonprofits, human service organizations, and churches may not lend as much money as payday lenders do. By some, that has been viewed as a weakness of the system. However, I will remind you that, unlike payday lenders, the goal of these organizations is not to have repeat business – their goal is to help vulnerable families weather a storm and fill the void where credit unions and other lenders would traditionally offer safe, credit-building loan products.

In closing, I implore you to take a moment to read through the list of organizations banded together in unity against predatory lending. It is comprised of your friends, neighbors, and constituents. It’s comprised of the people bettering their communities by defending the most vulnerable among us with no promise of money, recognition, or accolades. These are the people who deal with and oftentimes pick up the pieces once families’ lives have been thrown into disarray after falling victim to predatory lending practices.

Once again, thank you for your time and for the opportunity to discuss this matter with all of you.