So, why isn't this considered ample access to healthy funds? Payday loans have insanely high interest rates and are given to people in need of quick money - who typically cannot afford the cost of the funds. Payday loans typically charge an Annual Percentage Rate of 390% to 550%.
The results of this can be disastrous. Let’s say you’re $100 short of rent at the end of the month and take out a payday loan for $100 for the emergency. If you’re unable to pay it off by the end of the year (as is the case for many poor Americans who don't have an extra $100), you could owe a whopping $550. If unpaid for the next three years after that, you would be in debt by $91,506.25.
With scenarios like these, it’s no wonder that the nation’s largest predatory lenders - typically big banks - wind up with $1.5 billion in profits every year. Meanwhile, poor people suffer disastrous economic stress, foreclosures, and worse economic access to human rights like food, shelter, and health care.
Payday loans certainly have low-barriers - but not the kind that we need in the Black community, because of their predatory high interest nature. What we need in the community is low interest, low barrier grants, loans and investments for the economically disadvantaged.
That's why Economic Empowerment Wisconsin is connecting to provide access to low-barrier grants, loans and investments to entrepreneurs of color. Sign up for the mail list to stay informed and get involved at the bottom right corner of this page here.