Friday, November 10, 2006

Assemblywoman Barbara Buckley hears the story all the time. It’s the one about the fast cash advance lenders again - an industry upon which she and her colleagues attempted to impose tighter restrictions during the last legislative session.

“Just a couple of weeks ago, I saw a payday loan customer with serious mental and physical disabilities. The person borrowed $200, at 800 percent interest, for 52 weeks. After paying $1,800, the consumer is then to pay a $260 balloon payment. The business is attempting to evade all the Nevada laws passed last session by restructuring the loan not to be a short-term loan,” the assemblywoman said.

Seattle-based Moneytree is one bad credit payday loan and check-cashing company in Nevada that has made a few heads turn lately as well.

Moneytree, like its fellows, profits from payday loans and percentage-pay check cashing, and by selling phone cards and money orders. It, too, counts the less financially stable as its primary customers.

Unlike the others, reports the Las Vegas Business Press, in this alternative financial-services universe, however, Moneytree also has a long history of giving back to the people it serves.

Several days ago, the payday loan company made a sizable donation to Nevada Partners, in North Las Vegas, for development of the Wealth Building Center.

The company is underwriting the program with a $100,000 commitment, spread over five years. Moneytree’s donation specifically funds program that train children and young adults to develop financial literacy, entrepreneurial skills and lessons in avoiding the trap of predatory lenders.

Planned workshops will focus on such skills as building a budget, managing a savings account and learning to cut unnecessary spending. This is the first program at Nevada Partners to specifically address these needs.

According to Moneytree’s literature, this is the first financial literacy program it has funded in any of the communities where it operates - the provider of cheap payday loans runs more than 115 stores in Washington, Idaho, Oregon, California, Colorado and Nevada.

Payday loan climate: Moneytree’s contribution comes on the heels of an uncertain political climate for businesses that cater to consumers otherwise left behind by traditional banking service providers.

Beyond the new state rules passed last session, various Nevada cities decided to take a stand.

North Las Vegas passed a six-month moratorium on new payday cash advance businesses last year, and Henderson and Las Vegas leaders also recently sought restrictions. Buckley says political pressure won’t cease until the business practices of some loan companies improve.

“Until lenders stop placing people on debt treadmills, I would suspect that political pressure will not alleviate,” she said.

Moneytree President Dennis Bassford says no connection exists between his company’s donation and the ambiguous political climate surrounding the instant cash loan industry. Actually, he said, his company worked closely with Buckley to force change in the industry.

“We’ve been doing it (giving to community organizations) for years. Since the day we were first in business,” he continued. “What’s great about this is we are supporting a program that provides people with tools.”

While financial literacy may just keep some in the community from ever becoming customers, it still makes business sense to support financial literacy programs, Bassford explained.

“We benefit from people being employed. We benefit from that person’s productivity, from that person’s ability to pay their taxes,” he said.

Buckley said other companies that specialize in online cash loans rise to the occasion and become honest members of the community.

“When looking at some of the worst abuses by the payday loan industry, they (Moneytree) seem appalled as well. They agreed to the crackdown last session on payday lenders who were preying on military personnel, and adding hundreds and thousands of fees on the backs of unknowing consumers.

“By investing in reputable nonprofits, they show they want to be part of the community. Unfortunately, they seem more an exception than the rule,” Buckley said.

Nevada Partners directors agree that, if more training is available in the community, the less impact businesses like cash advance companies will have.

Moneytree has raised the bar with its donation, Nevada Partners CEO Steven Horsford said. His organization once relied almost entirely on government funds. But these days, low unemployment in the region actually drives down the group’s government-provided funding and thus the organization has had to diversify its resources.

“This is exactly the type of support we need,” Horsford said. “This is a commitment. They are investing in a program. It’s not buying a table at a dinner and walking away. It’s a sustained commitment and we hope we can continue this for longer than five years,” Horsford said.

Moneytree and Nevada Partners hope the Wealth Building Center reaches as many as 1,000 young people, with an aim toward motivating them to make sound financial decisions - and maybe spurring some entrepreneurial spirit as well.

This entry was posted on Friday, November 10th, 2006 at 6:29 am and is filed under Nevada.