Some of LISC’s most important investments come in the form of time, effort and expertise—which is what it takes to shape government policies that close the opportunity gap. In Toledo, that’s exactly what LISC invested last year to push through a city zoning change that put limits on payday lenders who overwhelmingly target people with minimal incomes and communities of color.
With interest rates as high as 600 percent, payday loans are well documented as driving people who don’t have the savings for an emergency car repair, say, or a high winter heating bill, deeper and deeper into debt. The firms making the loans, most of them operating in multiple states, suck resources out of local communities. And their business practices are designed to mislead clients about the costs and collection structure of the loans. To put an end to this cycle, LISC spearheaded efforts to pass a city ordinance curbing the spread of predatory short-term lending in Toledo.
Beginning in 2016, LISC formed a partnership with United Way of Greater Toledo to connect unbanked residents with resources. In this effort, a LISC AmeriCorps member conducted a community-wide survey and mapping project. Review of the data led to a larger partnership to jump start this initiative with a nonprofit regional law firm, Advocates for Basic Legal Equality (ABLE) and Toledo’s Financial Opportunity Center network, along with city and county agencies.
LISC led the research on the lending practices and possible policy solutions as ABLE led an effort to documenting the damage payday lenders were causing in the community. Armed with data and testimony from many residents who had fallen into seemingly limitless wells of debt because of payday and auto title loans, the partners drafted reform legislation that was championed by Toledo councilmember Dr. Cecelia Adams.
LISC staff also organized coaches and clients from our Financial Opportunity Centers, as well as neighborhood groups, to hold public demonstrations and speak in support of the Short-Term Lender Ordinance at planning commission and city council hearings
In May 2017, the ordinance became law which included placing a moratorium on new predatory lenders opening in the community, and effectively reducing the number of existing predatory lenders through attrition.
LISC’s effort has ever widening implications including inspiring new fair, low-cost lending products for Ohioans. Now, the state is weighing protective legislation to protect consumers by limiting the interest and fees short-term lenders can charge. And LISC is supporting employer-based small-dollar loans that help workers build positive credit histories—without getting trapped in debt.
Photo credit: LISC Archives
Private Sector Support
Public Sector Support
Executive Director: Kim Cutcher
500 Madison Ave, Ste. 312
Toledo, OH 43604