Alliance for Economic Inclusion (AEI) 

Baltimore, MD

Goals of the AEI Small Dollar Loan Program
        - Build good savings habits
        - Improved credit-risk profiles/Establish personal credit history
        - Eliminate a common source of personal stress
        - Obtain personal financial education
        - Transition from higher cost to lower cost loans

Affordable Small-Dollar Loan Guidelines 
        - Cost-effective, safe and sound. 
        - Affordability
        - Underwriting. 
        - Financial education and savings, 
        - Community Reinvestment Act (CRA) credit

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Features
        - Targeted to certain markets, such as military customers, employers, LMI customers, the underbanked, new Americans, or customers with a limited or non-existent credit history.
        - Developed to address the regulatory recommendation.
        - The goal is to enable insured institutions to profitably serve an underserved market while helping consumers avoid, or transition away from, reliance on high-cost debt.4 

CRA Consideration for Small-Dollar Loan Programs
        - Under interagency guidance, examiners may favorably consider small-dollar loan programs when evaluating the lending performance
        - The Federal banking agencies have emphasized that programs that transition borrowers from higher cost loans to lower cost loans are particularly responsive to community needs 
        - Small-dollar loan programs may qualify for favorable consideration under the community development service criteria

History
        - The Baltimore AEI was launched on May 1, 2007.
        - Currently has over 40 members. 
        - Committees include the Asset Building, New Americans, & Research and Data Collection, 
        - Collaborative small dollar loan program. 
        - Baltimore Homeownership Preservation Coalition
        - Foundations participation

Loan Program Model 

The program has three (3) components: 

Loan:  Applicant can borrow a min. of $300 up to $1,000, repaid over 12 months at 17.99%  APR

Savings: Borrower must include in each payment a minimum of $5 savings to be deposited in a savings account.

Match: After the loan is fully paid off, the total savings amount is matched with AEI funds on a 1-to-1 basis. 

Financial Education: Borrower is required to attend two financial literacy classes offered by NHS of Baltimore free of charge.

Foundation Support
        - Loan loss reserve
        - Focus groups
        - Check cashing/payday lending survey
        - Marketing assistance
        - Grants for payroll
        - Grants for loan pool

Nonprofit Partner: Neighborhood Housing Services (NHS) of Baltimore
        - Existing Lending platform/underwriting/loan decision making
        - Chartered member of NeighborWorks America
        - Certified CDFI 
        - Centrally located
        - Existing partnerships
        - Name recognition
        - History of community outreach
        - Providing Loan Loss Reserve

Current Financial Partners
        - Suntrust Bank
        - Provident Bank
        - BB&T
        - Municipal Employees Credit Union
        - M&T Bank
        - Hamilton Federal Bank
        - Bank of America

**adiakhate (a) -**I was not aware of MCU deciding to provide funding for the program. 

Issue to be Resolved
        - More Affordable Interest Rate
        - Maximum Saving Amount Qualified for Match
        - Loan repayment Schedule-monthly vs. biweekly
        - Limit on the number of loans a borrower can take
        - Bank Account Set up
        - Incentives for completing educational program
        - Collection and processing of cash payments