Exodus Lending, which launched two years ago from a Minneapolis Lutheran congregation as the first alternative to  payday loans, has made its 100th loan, including to 41 working-poor borrowers who were refinanced from the “payday loan debt trap” and repaid in full.

 “We had no idea the program would grow this big and help so many people,” said Exodus co-founder Meghan  Olsen Biebighauser. She estimates it has saved borrowers who were paying an average of 425 percent in annualized interest nearly $300,000 in fees and interest on nearly $70,000 in principal.
“We’re disrupting a system of wealth extraction from our community,” she said.

Exodus said its first 41 borrowers have repaid in full at little-to-no interest.
Industry researchers estimate 23,000 storefront payday lenders operate nationwide, not including numerous licensed and illegal online lenders.

The payday industry boomed after the Great Recession when working-class borrowers lost jobs or had hours cut.In Minnesota, the number of legal payday loans taken through licensed lenders more than doubled between 2006 and 2012, to 371,000, according to a study of Department of Commerce data by the Joint Religious Legislative Coalition.Minnesota borrowers took an average of 10 loans per year, paying an effective annual interest rate between 391 percent and 1,000 percent.
St. Paul-based Sunrise Banks, working with Lutheran Social Service and watched by state and federal regulators, also has introduced TrueConnect payroll deduction loans that enable a growing number of employers to offer 12-month loans repaid through payroll deductions.
Most payday loan borrowers have jobs and bank accounts, which enables the lenders to access their accounts for cascading fees and interest. Even though the Pentagon has banned payday lenders from bases, the Minnesota Commerce Department has been unable to persuade the legislature to tighten the multiple-loan rules and other provisions regulating what Commerce regards as a predatory industry.

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