The group works with First bank for farmers and merchants to take out low-interest loans to pay off high-interest payday lenders who hold loan consumers hostage with hard-to-pay finance charges.
The only problem for PGF to repay a loan is that clients have to repay the loan at a lower interest rate and accept financial coaching led by a face-to-face “client-friend” mentor.
Clients are required to complete 12 sessions, once a week, with a curriculum-based budget guide led by one of two mentors paired with each person.
“We really want to focus on building relationships and offering hope,” said Executive Director Laurie Cole.
In a best-case scenario, Cole said he’s seen people go through the program, pay off their debt, and then come back to mentor others once they’ve received their own debt relief.
Mentors don’t need any training or in-depth knowledge of budgeting, but must complete a short mentorship program led by Cole.
“Most mentors are members of the local church who have a heart to serve beyond the walls of the church,” Cole said.
The partnership with FF&M Bank helps borrowers repay loans that are small compared to a much bigger payoff with payday lenders.
“Just recently, we helped a lady who was paying $275 every two weeks reduce her payment to $140 a month,” Cole said.
A way out of the “debt trap”
PGF Treasurer, Marcus Houston with FF&M Bank helps facilitate the loan relief process from his role as an ARC Officer, which assists in community development.
Houston saw the opportunity to help people struggling with debt, knowing that Tennessee is number three in the nation for payday loans.
“I have an obligation to seek out partnerships that help people move forward [with their finances]”Houston said. “A lot of people can renew their loan up to eight times. That doesn’t really help anyone.
Recipients don’t need to have good credit or even no credit, Houston said.
The client’s repayment of the PGF loan achieves a fixed interest rate of 2.25% which is backed by an investment-based savings account, securing the loans.
“The biggest thing here is the financial literacy component,” Houston said. “People who get help end up saying, ‘Oh, I see why I don’t have any money.’ When [clients] To look at [their finances]they realize how much money they can actually have.
Cole and Houston said the organization is a service designed by Russ Adcox and Randy Nichols, who is also the director of free ride service, Maury United Ministries in Colombia.
The group grew out of a social media conversation in 2013 with a post from Adcox, Cole said.
“Russ had written a post on Facebook saying, ‘How many payday loan spaces can a street have?’ talking about James Campbell Boulevard,” Cole said.
“People started commenting, saying we should take them all down,” Cole said. “The more realistic approach was why don’t we just help people at the local level, one person at a time.”
The idea sprouted as the group began to help people get out of the debt trap.
With some ebbs and flows, the organization has experienced setbacks that set back its outreach during COVID-19, Cole said.
For-profit industry supports payday lenders and politicians
A recent investigative report by The Tennessean found that payday lenders are mammoth political contributors, with Advance Financial’s PAC standing ahead of the pack over the past 10 years, contributing more than $2 million since then. 2012.
The payday loan lobby looms large in Tennessee — a state with 1,900 registered lenders across the state and one of the top-spending industries to lobby Tennessee lawmakers, according to the report.
Tennessee law required lenders to limit the amounts and terms of payday loans and cap interest rates at 15% of the borrower’s salary thanks to 2012 legislation, but lawmakers have found a replacement with the birth of the flexible loan.
Flex loans, which were legalized in 2015, are now the top money maker more than payday loans, with a 279% percentage rate according to the Tennessean report.
Maury County is no different when it comes to many payday loan options and with 35.6% of households now earning less than $35,000 a year, according to census reports, many can see the solution. a loan provides without knowing the ultimate cost of that solution, Houston said.
For those borrowing and having trouble escaping, Pay Grace Forward can step in and provide the answer in a way that no other option provides, Houston said.
“If you’re looking for an organization you can see the difference with, you can see it with Pay Grace Forward,” Houston said.
For more information, visit paygraceforward.org.