â€œUnlike other loan programs for individuals with low or no credit, the Small Dollar Loan program provides the opportunity for individuals to build or re-establish their credit and eventually have access to more traditional forms of credit,â€ expressed Senator Ben Hueso. Â â€œThis loan program has proven to be a success and I thank the Governor for making this program now permanent for all Californians.â€
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. Â 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.
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. Â 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 Californianâ€™s access to affordable credit.