Alternatives is a regional Community Development Financial Institution (CDFI) dedicated to building wealth and creating economic opportunity for underserved people and communities. Alternatives was started by a group of small mom and pop businesses, cottage industries, self employment start-ups. They were successful because the people in them were doing what they wanted to do and making a living. Although they were financially sound, they got no respect from the banks. They made deposits but couldn't get loans.
Our first members decided to start their own financial institution. We saw other areas where low income members weren't given their due. Banks underwrote and sold their mortgages on the secondary market. All their loans had to meet standards designed for suburban, white, middle class, family lending. Not all our members fit that pattern. We felt we could develop new lending standards that served our members. Over the years this vision has been confirmed. Loans to low income borrowers do not have a higher default rate. Loans to small businesses are repaid. Reinvestment results in sustainable, self help community development.
We saw another area that members of the community were being robbed: predatory tax preparers who engaged in hard sell tactics to provide "instant refunds" charging interest rates of 400% to allow taxpayers access to their own money! Starting in 2003 we offered free tax preparation to anyone below a certain income level, discouraged the use of "refund anticipation loans" by offering free e-file and free direct deposit. The Free Tax Prep program has grown an average 10% every year.
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