New interest-free loan program launched in LA County to help prevent homelessness


New assistance is available in LA County for people facing the prospect of losing their homes. The Short-Term Eviction Prevention Fund (STEP), a program funded by the nonprofit, is launching a pilot program to provide 1,000 microloans of up to $2,500 to people at risk of eviction or facing other housing issues. challenges.

Adam Miller, the founder of the STEP Fund, said he started the program in response to research showing that many people lose their homes following some type of financial shock.

“It could be a car accident, a trip to the hospital, something that happens with work – in any of those cases the person gets lost and it can lead to a cascading series of problems that prevent you from being able to pay rent and ultimately be evicted.

Miller said the goal is to provide people in these situations with the money they need to survive a short-term crisis and help them become financially stable.

To be eligible for a loan from the STEP Fund, a person must be below the median income for the area and demonstrate that they are at risk of eviction or need help paying bills or finding a job. lodging. The loans are interest-free and recipients have three years to repay them.

The STEP Fund model is currently being studied by the Lab for Economic Opportunity at the University of Notre Dame. Although it’s too early to know the full extent of the results and there has been some debate about how effective micro-loans really are, Miller hopes the program will reduce homelessness by stopping people from find yourself homeless. According to the Los Angeles Homeless Services Authority, 82,955 people became homeless in LA County in 2019.

The fund conducted a small-scale pre-pilot of the program last year, making 35 loans to eligible people in the county. Courtney Bailey, mother of five young children, was one of the recipients.

In the fall of last year, Bailey received a call she had been dreaming of receiving. A four-bedroom apartment in an income-based rental unit was available. It was much bigger, more spacious and well maintained than his house at the time.

“My situation wasn’t the best, our apartment was super small, there were a lot of repairs and the landlord didn’t want to pay anything,” she said.

Bailey was thrilled with the news, but then came the caveat – the new apartment was only hers if she could pay the $500 bond within ten days, which she knew she couldn’t get. to allow something to be done.

“At the time, I was on leave due to COVID, so I was on unpaid leave,” Bailey said. “The money I had was used for my kids and my food and I tried to stay afloat with stuff like that.”

She shared her situation with the person who had helped her find the new apartment and he put her in touch with the STEP Fund. Within a week she had applied for and obtained the loan and the STEP fund sent the money directly to the new apartment to secure her place. Bailey has since returned to work as a mail clerk at the post office, graduated from college, and wrote a children’s book. She said none of this would have been possible without the loan and now that she is in a better place, she has already started making payments and is determined to pay it back as soon as possible.

“I feel like I’m starting to gain some capacity to have financial freedom,” she said. “My goal is to pay it back before the three years.”

Miller said he expects some loans won’t be repaid in full, but said the program factored that into its funding model. However, he hopes the majority of recipients, like Bailey, will want to pay it forward and allow the program to become self-sustaining, providing loans to more people who need them, when they need them.

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