SACRAMENTO – State Senator Ben Hueso (D-San Diego), today introduced a bill that would eliminate the sunset date of January 1st, 2018 for the pilot program Increased Access to Responsible Small Dollar Loans and make it permanent for Californians. Senate Bill 984 will continue to increase the availability of responsible small dollar installment loans of at least $300 but less than $2,500.
“According to the Consumer Protection Bureau, forty-five million Americans have low or no credit history,” stated Senator Hueso. “Unlike other loan products for individuals with low or no credit, this program provides the opportunity for individuals to build or reestablish their credit because lenders are required to report their activities to credit bureaus. This gives customers the opportunity to eventually have access to more traditional forms of credit like bank loans and credit cards.”
In 2011, the California Legislature created a pilot program which was intended to increase the availability of installment loans on terms that were more affordable to borrowers and would help them build or reestablish their credit scores. Until this program came to place, many Californians with low or no credit only had access to high cost loans with triple digit interest rates and with no ability to build credit to access lower interest loans.
“The program provides individuals who do not have other viable options for credit access to affordable capital,” stated Luis Alejo, Chair of the California Latino Legislative Caucus and Principal Co-Author of the bill. “With over half a billion dollars loaned in four years, this program has proven to be a success. Consumers certainly benefit when they have access to a wider range of lending options.”
In the last four years, the Department of Business Oversight, which oversees the program, has reported that repeat customers of the pilot program have seen their credit increase an average of 355 points. Making the Increased Access to Small Dollar Loans program permanent will encourage more lenders to participate in providing these loans and give comfort to existing companies to expand, enhancing low income Californian’s access to affordable credit.