The Causeway Work Centre says it plans to open a new fund early next month aimed at giving residents another option to high-interest payday loans.
The not-for-profit agency has raised $100,000 from several credit unions and donors to serve as loan guarantees for the Causeway Community Finance Fund.
The fund will provide small, short-term loans at “fair and reasonable rates” to individuals who are caught in the “burdensome cycle” of payday lending, Causeway said in a statement. It added that repayment terms will be “flexible” and that fund managers will work with their clients to help them improve their financial literacy skills.
Payday lenders have proliferated across the province over the past decade. In 2014, the Ontario government commissioned a report by Deloitte that found there were nearly 800 payday lenders in the province issuing up to $1.5 billion in loans to 400,000 Ontarians each year.
While the industry argues that it provides a valuable service to individuals who may be unable to access other forms of credit, others have criticized the high interest rates typically charged by payday lenders.
The Causeway Work Centre is based in Hintonburg and supports individuals in overcoming disabilities and other challenges to help them find work and live more independently. Alterna Savings, Frontline Credit Union and Your Credit Union are among Causeway's partners in the new fund.
The fund will be officially launched next week on Friday, Nov. 4.