Stay Informed!

By Lauren Stebbins on 11/09/2010 @ 02:26 PM

Tags: Innovation, Matched Savings, Financial Empowerment

An article in today’s Baltimore Sun reported on the expansion of a relatively new small-dollar loan program called Borrow and Save, which provides low- and moderate-income Baltimore residents with low interest (7.99%), small loans that range from $300 - $1000. Loan recipients that save a minimum of $5 each month during the repayment period will have the total amount of their savings matched once the loan is fully repaid.

Borrow and Save has made substantial progress in its short existence of less than 2 years. It has gone from serving just residents in East Baltimore to serving those in all neighborhoods of the city. Modifications to the program such as a required financial literacy course before receiving the loan have already been instituted and are making progress to address the default rate of 20 percent.

Low-interest, small dollar loans are a much needed alternative to costly payday loans and credit cards, which often have extremely high interest rates that make repaying the loan or debt prohibitively difficult. Given the large financial toll that unexpected and high-cost expenses (e.g., car repairs, medical bills) can have on individual and household finances, it is very encouraging to hear about programs like Borrow and Save that not only help people manage these expenses without accumulating large amounts of debt but also encourage them to start or continue building their savings.

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