Published: July 16, 2008 03:20 pm            

Good stewards — 07/17/08

No-interest loans will enable CAReS to help more people

A new interest-free loan program will enable CAReS to provide more low income residents with assistance with their utility bills by offering recipients help in paying their bills instead of just handouts. From our vantage point, the loan program is a plus for both those who support CAReS (Community Assistance and Referral Services) with their donations — primarily more than 50 Boyd County churches that are “covenant partners” and the United Way of Northeast Kentucky — and for those needing help with their utility bills.

Those who support CAReS with their donations will benefit because the loan program has the potential of having those gifts benefit the poor for years to come, instead of simply providing one-time help with a utility bill. By investing those gifts in interest-free loans to help the poor pay their utility bills, the program is creating a revolving fund that can be used to provide assistance to more people. Much like Habitat for Humanity re-invests the no-interest loan payments it receives from families purchasing Habitat homes to provide loans for more homes, CAReS will re-invest the payments on interest-free loans for utility bills on loans to help more people.

The loan program also will help the recipients by helping them help themselves. Because of a lack of money, CAReS — which does many other things besides helping with utility bills — has never been able to do much more than provide short-term, stop-gap assistance with the utility bills of those facing an immediate loss of essential services. However, a partial payment on a utility bill provides no long-term help for those struggling to pay their bills. It has the effect of putting a Band-Aid on a gushing wound.

CAReS hopes the loan program will help make the recipients more responsible consumers. CAReS-trained case workers will help recipients with budgeting and with making the right decisions on how to spend their limited income.

The loan program also helps discourage recipients from turning to another common source of ready cash money for low-income residents and others poor credit histories: Payday lenders. Leslie Moore, executive director of CAReS, said she is astounded by how many of the people who come to CAReS for help have been “ripped off by these check-cashing services.” While the payday lenders charge double and triple interest rates, CAReS charges no interest on its loans.

CAReS will continue to provide emergency help with such necessities as food, prescriptions, diapers and other essentials free of charge. In fact, the loan program for utilities should mean more money is available for the agency’s other services.

Moore recognizes that not all loans will be repaid, and the only “punishment” for those who fail to keep their end of the bargain is that they will not be eligible for more assistance on utilities until the loans are repaid.

However, while the loan program has just started, more than 75 percent of the recipients are making loan payments. “A lot of our people don’t want handouts,” Moore said. “They just need a little help to get over the hump. ”

There will never be enough money for CAReS or any other agency to meet all the needs of the poor in this or any other community. The loan program helps stretch what money is available to help more people with their utility bills. That’s good stewardship.

        

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