How to protect Tennessee families from predatory lenders

  • Pastor Lawrence Turner is senior pastor of Mississippi BLVD Christian Church in Memphis and founder of the Black Clergy Collaborative of Memphis and the African American Clergy Collective of Tennessee.

After her husband died in 2020, Yolanda Rogers needed help paying her bills. His sister, Gwen Miller, had no credit and didn’t know how to establish it.

Both sisters were tied up — and ready to be abused by predatory payday lenders. Fortunately, they were referred to the Borrow and Save program of the Black Clergy Collaborative of Memphis and Hope Credit Union by their church, Christ Missionary Baptist. With the small loans approved and the support needed to repay them, Yolanda was able to get back on her feet and Gwen was able to establish a good credit rating.

The BCCM/HCU Borrow and Save program that has helped the sisters get — and stay — on a solid financial footing was launched in 2021 to combat the predatory loan businesses that are thriving across Tennessee.

By design, the practices of these companies have kept too many Memphians, Tennesseans and working-class Americans in debt. Unfortunately — and unlike neighboring states — Tennessee lawmakers also seem keen to allow predatory lenders to trample on consumers in the name of political donations.

The Borrow and Save model is desperately needed

The BCC/HCU program does the exact opposite and it works. Borrowers not only receive small loans and help to repay them, but accrue interest that accrues to them after their loans are repaid.

Reverend J. Lawrence Turner, senior pastor of Mississippi Boulevard Christian Church (known as BLVD), speaks during a service.

With committed funding of $100,000 and a mission to help our borrowers become financially secure, we made over 50 referrals and processed 29 loan applications of $1,000 or less. We have also extended the program beyond personal finance to car loans and mortgages. The Borrow and Save model is desperately needed in a city like Memphis, which has the highest concentration of predatory loan companies in Tennessee. But this is only a first step.

Predatory lending firms abound across the country, but in our state in particular. In fact, national giants like Advance Financial, Check into Cash, and Title Max were founded in Tennessee and make money here, thanks to laws that prioritize their interests over borrowers.

According to a recent survey by The Tennessean, these three major companies have been among the top 20 contributors to state lawmakers since 2012. Advance Financial has been the largest company contributor to our lawmakers over the past 10 years, spending more than $2 million dollars in direct donations and $3.4 million in lobbying.

Create “justice-focused” lending programs

In 2015, the Legislature authorized payday lenders to introduce a new type of loan in Tennessee called a “flex loan”. Flexible loans, unlike most loans, do not require borrowers to produce collateral and can maintain it with interest rates of up to 280%. The reason this borrower trap is possible is that the legislature has not put in place consumer protection policies, such as an interest rate cap.

J Lawrence Turner

Fighting such legislation requires action on several fronts. First, I challenge the business community and institutional lenders state and nationwide to create justice-focused lending programs similar to BCC/HCU’s Borrow and Save program. At BCC/HCU, we are more than willing to help mission-driven lenders create these types of programs.

Second, Tennesseans must demand that our legislators stop facilitating the financial enslavement of our fellow citizens of the big will state by these corporations. Neighboring states impose constraints on predatory lenders. In Alabama, finance charges cannot exceed 17.5% of the amount of money lent. In Mississippi, lenders cannot lend more than $500, including fee amounts. Why can’t Tennessee do something similar?

Changing the way these predatory lenders are allowed to do business will help struggling people – people like Yolanda and Gwen – stay afloat and feed their families, which will also help their communities stay afloat. And it will prevent states like Tennessee from widening the wealth gap that has plagued low-income people for generations. When those who struggle begin to prosper, we all prosper.

Pastor Lawrence Turner is senior pastor of Mississippi BLVD Christian Church in Memphis and founder of the Black Clergy Collaborative of Memphis and the African American Clergy Collective of Tennessee.

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