On April 2, 2009, Senator Daniel Akaka [D-HI] introduced S. 786: Improving Access to Mainstream Financial Institutions Act of 2009. [Text of speech]

Senator Akaka’s bill is co-sponsored by Sen. Daniel Inouye [D-HI], Sen. Charles Schumer [D-NY] and Sen. Joseph Lieberman [I-CT]

S. 786 proposes funding demonstration projects to provide lower cost alternatives to payday loans that also include financial counseling. [Text of bill]

For over a year now, America’s Family, Inc. has provided this exact program for lower-income families here in Colorado. Founded in 2002, America’s Family is a 501(c)(3) nonprofit agency that provides access to capital and financial education for working families. Since the program’s inception in 2008, America’s Family has provided over $40,000 in alternative payday loans.

In brief, our 501(c)(3) nonprofit corporation owns a subsidiary Limited Liability Company licensed as a “supervised lender” under Colorado law. This company receives and reviews applications in accordance with state and federal regulations, and awards loans based on our underwriting criteria. All successful loan applicants agree to attend personalized financial counseling throughout the term of their loan. In just the past week, we have helped two applicants refinance over $5,000 in payday loans.

Our experience—and the success of our clients—provides real evidence that payday loans are not the only way to help lower income families who need short-term cash. America’s Family provides “proof of concept” for S. 786 and America’s Family can show demonstrated effectiveness in providing an alternative to payday loans combined with financial literacy counseling.