By Aaron Allen, The Seattle Medium
Verity Credit Union, a Seattle-based credit union that has had a longstanding impact on the Puget Sound region since 1933, is taking substantial and meaningful steps forward in the battle against predatory lending with a new initiative that promises to reshape financial access for underserved communities. Funded by a grant from the U.S. Treasury Department, Verity’s Small Dollar Loans is an initiative to combat predatory lending and provide critical financial resources to underserved communities.
According to Ziquora Banks, Chief Impact Strategy Officer at Verity Credit Union, Verity will utilize the grant to develop a small-dollar loan program, offering unsecured loans up to $2,500 with no prepayment penalty and the opportunity to repay in installments. This initiative empowers individuals to build credit and manage finances effectively, aligning with Verity’s mission to close the wealth gap.
“This (Small Dollar Loan) is really based around how we combat predatory lending,” says Banks. “A lot of times folks are going to predatory lenders for amounts that could be anywhere between $500 to $1,000, and addressing the piece of it where people are walking away from certain lenders paying upwards of 200% and not knowing it on that loan.”
With the aid of the U.S. Treasury Department, Verity can focus, serve, and create opportunities for those excluded from the benefits of the mainstream banking system.
“What we’re about kind of falls under our community impact programs and initiatives. We are a community development financial institution, which is a designation given by the U.S. Treasury for focusing on and being intentional in serving low to moderate-income communities,” says Banks. “And so, with that, a lot of our effort and focus at the credit union is around how do we serve and co-create with communities that have been historically excluded from mainstream financial banking. So that’s where the small dollar loan program stems from.”
Banks says the program is important because it allows Verity to serve individuals by helping them to build credit and gain access to an “alternative option” to high-cost small-dollar lending, by targeting unbanked and underbanked communities.
“I think by focusing on folks that have been historically underserved, that have been left out of mainstream financial banking, it only builds a stronger financial system for us all,” says Banks. “Everyone should have the opportunity to thrive. Why do some get an opportunity and others don’t? For us, it’s really important to address the way in which the system was built. It’s systemic. It was only built to operate for a few.”
“So we want to make sure that there is a difference made, and obviously this isn’t something that Verity can do alone. This is something that’s going to take all of us—different organizations, government, all of that—to really move this work forward to create systemic change,” Banks adds.
Verity Credit Union is advocating for creating opportunities for “generational wealth building,” setting the stage for financial and banking reform. According to Banks, breaking the cycles of financial illiteracy and access, curtailing the alarming rates of poverty, and addressing the growing wealth gap are the main focuses of Verity’s small dollar loans, grants, and other services.
“And so, for us, at the end of the day, it’s about generational wealth, it’s about being able to impact future generations,” says Banks. “So they’re not dealing with the same issues that we’re even dealing with now, that were the same issues that were dealt with generations ago, right? The racial gap growing wider, poverty growing at alarming rates, people not being able to even afford a home if that’s what they want to do. So how can we work together to make sure that everyone has the opportunity to do that?”
Financial literacy awareness and getting the word out regarding the services provided by Verity is also a primary focus. It is important to Verity that the community is aware that there are institutions such as credit unions that are available and that are here to help people with their day-to-day financial setbacks. We have all gone through times where money is short, and the Small Dollar Loans are there to lessen the burdens. Through aggressive marketing, Verity is sending the message that resources and help are available. “We are working to build on our marketing. We just really started pushing this out more. This is kind of the first step to bring more awareness to it, and then we absolutely will be pushing more through marketing efforts as well,” says Banks. “Working with community partners as well, we are spreading the word. So just different ways that we can leverage different channels to make sure the community hears about it. We are at community events with different organizations too, so we’re able to connect directly with the communities we’re serving.”
