Minnesota Sees Rise Of Payday Loan Alternatives

MINNEAPOLIS (WCCO) — Sky-high interest payday loans are getting some more affordable competition in the Twin Cities area from community-based organizations.

Minnesota Public Radio reports that Exodus Lending is one nonprofit offering residents interest-free loans to help pay off debts. Exodus Executive Director Sara Nelson-Pallmeyer says the organization has helped about 200 borrowers since April 2015.

Village Financial Cooperative plans to open a credit union next year. Village Financial development director Me’Lea Connelly says the credit union’s goal is to increase access to banking services, including low-cost, short-term, small loans.

There are at least five credit unions in Minnesota that already make small-dollar or auto loans to people wouldn’t normally qualify for a loan.

Payday lenders argue that high-interest rates are necessary to make small loans worthwhile.