Spring Bank Applauds CFPB Efforts to Rein in Payday Loan Excesses

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Spring Bank’s “Borrow & Save” and Credit Builder Loans are Already Helping New Yorkers Avoid Predatory Lenders & Build Assets

Spring Bank is a true community bank, serving underserved populations in the Bronx, Harlem and beyond.

Spring Bank opened its first expansion branch in December 2012, in Harlem.

We’re helping people get a foot in the credit door. It’s a powerful tool.

Spring Bank, a community bank based in the South Bronx, commends the Consumer Financial Protection Bureau for proposed rules that would end payday debt traps by ensuring consumers can repay their loans.

Since 2014 Spring Bank has offered loan products that closely adhere to the CFPBs recommendations-and then some. The bank’s “Borrow & Save” and “Credit Builder” loans were created to help consumers access affordable small dollar credit while providing opportunities to build credit and savings.

“We applaud the CFPB for taking steps that will protect consumers rather than miring them in affordable debt,” said Spring Bank President Eric Pallas. “Financial inclusion is the core of our mission, and that is why in 2014 the U.S. Treasury certified Spring Bank as a Community Development Financial Institution.” CDFIs are institutions that offer services to low-income people living in areas underserved by mainstream banks, and were first designated by Congress in 1994.

Spring Bank’s customers are already benefiting. When Rocque Acevado, a Bronx resident, needed funds to travel to the Dominican Republic he turned to Spring Bank. “I needed a small loan to go help my father-in-law with his immigration documents. I thought my credit score would make it hard to find an affordable loan. When my bank (Spring Bank) advertised Borrow & Save, I applied. I got the loan within three days and used the balance to pay off a high interest credit card. I was so happy when I paid off my loan to find out that my credit score had increased over 50 points,” said Mr. Acevado.

In 2007 Spring Bank was the first bank based in the Bronx in over 25 years. Since opening its doors, the $115M institution has focused on serving New York’s underserved. Borrow & Save is an example of how the bank creates innovative solutions to the high cost of borrowing from alternative sources, like pawnshops, rent-to-own stores and on-line payday lenders.

“Borrow & Save demonstrates that responsible lenders in New York City can offer alternatives to the predatory products that are so pervasive in low-income communities across the nation,” explained Mr. Pallas.

According to Melanie Stern, Director of Consumer Lending at Spring Bank, “Our approach is all about opening the door to people. Many of our customers have never had a credit score, or are struggling with damaged credit. We’re helping people get a foot in the credit door. It’s a powerful tool.” Ms. Stern notes, “Borrow & Save is not too short and not too costly and it helps consumers build credit. Instead of using applicants' credit score, we look at ability to pay. It’s important that our products be safe as well as useful.”

For Glamis Haro, a Certified Business and Credit Advisor at the Columbia-Harlem Small Business Development Center, Borrow & Save loans provide her business clients with an opportunity to access credit and build their credit profile. “One of my clients was denied a microloan because of a thin credit profile due to inactivity. I recommended he apply to Spring Bank for a Borrow & Save loan. In three months his credit score went from ‘none’ to over 700.”

Mr. Pallas noted, “The CFPB is taking important steps to insure that consumers in need are helped, not hurt. We are pleased that the small dollar loan and credit builder products here at Spring Bank exceed the CFPB’s definition of a responsible product.”

About Spring Bank

Founded in 2007 to serve New York City’s underbanked, Spring Bank is an FDIC-insured, independently owned, community development bank headquartered in the Bronx, New York. In December 2012, the Bank’s second branch opened in the Harlem community of Manhattan. Since its founding, a primary mission of the Bank has been to provide the products, services and education that enable low-wealth customers to benefit from mainstream banking.

Spring Bank is equally committed to stimulating and supporting small business growth through deposit and loan products. Spring Bank lends primarily in the five boroughs, with a significant portion designated for low and moderate income census tracts. The Bank provides a wide range of innovative deposit and lending services, many with superior rates.

In 2013 Spring Bank became only the third New York State Bank to be certified as a Community Development Financial Institution by the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund).

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Brian A. Blake
Spring Bank
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since: 10/2012
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