Twin Cities-based nonprofit Prepare + Prosper and Sunrise Banks will announce Wednesday a multiyear plan to provide thousands of low-income families with an alternative to payday lenders and check-cashing operators.

The Financial Access in Reach (FAIR) plan is aimed at providing "financially underserved" people with access to a checking, savings and small-loan program at a modest cost.

"The financial inclusion gap is a big problem," said Tracy Fischman, executive director of St. Paul-based Prepare + Prosper, which helps thousands annually with free tax preparation and financial counseling. "It negatively impacts people's economic footing, well-being, health, and more. People need financial products and a system that work for them and not against them as they strive to be financially successful."

Participants in the FAIR pilot project will be selected from Prepare + Prosper customers, as well as those served by partnering organizations. The pilot project will launch in January 2019 with about 500 people.

Participants will pay $3 per month for a checking account with no minimum balance and no overdraft fees. They will get a savings account and be able to borrow up to $500 at 8 percent interest.

It can cost far more than that to use payday lenders for short-term loans, particularly when borrowers fall behind on payments.

"Collaborating with Prepare + Prosper on the FAIR Initiative is giving people the tools they need to improve their financial wellness," Sunrise CEO David Reiling said in a statement. "We're setting an example for many financial institutions to follow, and working to change the way they do business."

Several years ago, Sunrise launched a growing payday-lender alternative with Lutheran Social Service of Minnesota and employers that allows employees to borrow against future income from their employers, financed by Sunrise, up to certain limits to help with unexpected expenses.

The FAIR initiative started when the Northwest Area Foundation in 2013 convened a working group of Twin Cities bankers, nonprofits and local governments. Backers and funders include the McKnight Foundation, Minneapolis Foundation, JPMorgan Chase Foundation, Otto Bremer Trust and Minnesota Department of Commerce.

"We're being thoughtful and deliberate and want to get it right," Fischman said. "We're looking at this as a scalable solution over several years. Nationally, we have the pieces to go into other markets. It's a bundled financial solution, coupled with financial counseling and ongoing support.

"This could be a nice tool to work through small business, HR departments and other companies and banks. It can help people get ready for homeownership. We will partner with employers and other organizations through referrals or otherwise."

The child-care and early-education company New Horizon Academy is an employer partner.

Said New Horizon CEO Chad Dunkley: "The partnership with Prepare + Prosper is an opportunity to support employees and their families."