GARDNER, Mass.–GFA Federal Credit Union said it has begun to offer microloans to members as part of an effort to provide members with an alternative to predatory lenders.
The credit union said it is offering the service in partnership with the fintech Salus.
“Microloans are a powerful tool for financial inclusion,” GFA EVP/Chief Lending Officer Tom McGregor said in a statement. “With no credit check, low interest rates, and quick access to funds, they provide members with a reliable alternative to high-cost payday loans—offering help without harm.”
The organizations said in a statement that there is a “broad spectrum of people” in the market for microloans, in addition to the market that has historically included, such as disadvantaged areas, millennials and Gen Zs, and those who have thin to no credit files.
What Data Show
Salus cited data indicating fully 90% of microloan borrowers are 41 or younger, making another compelling argument for credit unions to offer them.
The $670 million GFA FCU is a low-income designated credit union with branches in underserved communities.
“By offering microloans and other member-first services, we help protect our members from financial harm and ensure their well-being remains at the center of everything we do,” McGregor said in a statement.
In a statement, Salus Founder/CEO James Chemplavil said his company and GFA FCU have missions that are “well-aligned.”
“Our data analytics show that credit union members across the country use predatory payday lenders, pawn shops and other unscrupulous lenders to get cash fast,” Shemplavil said. “Now, with neobanks luring credit union members away with microloans, they’ve really shifted from a nice-to-have to a must-have.“
Lesson from a Teacher
According to the company, Salus was created to help level the financial services playing field for everyday people, like Chemplavil’s son’s preschool teacher, who lost her job because she couldn’t afford to repair her car.
“A few hundred dollars would have made an enormous difference in her life,” said the company, which added it leverages alternative data analytics to offer automated microloans to credit unions so they can more effectively serve microloan borrowers “at scale.”
