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Sunday, March 3, 2024

You’ve Heard of Food Deserts, but what about Banking Deserts?

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A 2015 Consumer Financial Protection Bureau (CFPB) survey found that 26 million Americans are credit invisible. One in ten adults in the United States lack credit history to generate a traditional credit score and cannot access the formal financial system. 

DEFINED “Credit Invisible”: Someone who’s credit invisible has no credit history with any of the three major credit bureaus (Experian, Equifax and TransUnion) and is therefore unable to prove any creditworthiness

Banking deserts are geographic areas lacking banking services, which exacerbate the likelihood of credit invisibility. Across the country, elderly populations and communities of color are more likely to be impacted by banking deserts and resulting credit invisibility. 

What’s the alternative for those living in banking deserts?

Payday Loans Stores. Payday loans are the alternative, but they are not a solution. In fact, they amplify the negative effects. 

These loans are high-interest loans designed to give borrowers a quick cash advance in a pinch. For many who live paycheck to paycheck, struggle with debt or have bad credit, payday loans provide immediate funds that they may not qualify for elsewhere.

These loans come with a lot of risks.

Payday Loan Risk Statistics provided by Bankrate:

  • Twelve million Americans use payday loans every year.
  • The average payday loan is $375 on a two-week term with an average of $520 in fees.
  • 80% of payday loans are taken out within two weeks of paying off a previous payday loan.

A new solution emerges where people are opening up their own wallets to support others in a pinch. 

The Halo App, founded in Indianapolis, is a people-to-people micro lending platform. Borrowers can request loans from $100 – $1,000 and take 6 months to pay it back. The best part is that the loans are funded by other members of the community, not payday loan centers. We’re creating a new level of loan repayment trust through our community lending model, and we’re seeing it work every day.

The SHE. Xperience is an example of a thriving Halo Community. The SHE. Xperience provides venues for Black-owned businesses to increase their customers and revenue, learn sound business practices, build relationships, and circulate their dollars within the Black community.

We’ve partnered with She Experience to create The She Bank offering interest free micro loans to their community. 

Halo App “Borrowers” are requesting loans for the same reasons people take out payday loans.

  • Utilities
  • Car payment
  • Credit card payment
  • Rent/mortgage
  • Food

“Thousands of people are using our app for micro-loans but we’ve added a new layer of security and humanity via our community model. We partner with communities and help them share the opportunity straight to their community.” – Taylor Simpson, Founder, and CEO

Where is your community? Is it your church? Your school? Your beloved nonprofit? Your employees? Whatever your community organization looks like, you can harness its collective financial power with the Halo App.

We’re on a mission to strengthen communities through anonymous, intra-community financial assistance and goodwill. This is the future Halo App is envisioning. We’d love for your community to join us in the future of peer-to-peer financial support.

Multiple bills were hitting me all at once in February. I had to make some payments so I wouldn’t fall deeper in a hole. I don’t know what I would have done in March if it wasn’t for the halo App.  Thank you.” 

  • Maunika Escobar – A Borrower in the Freelancers United Halo Community. 
  • Want to learn how your community can access people-to-people lending? Talk to us here.
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