First in a set, “A Sustainable Economy Rises in Los Angeles.”

This short article is from Dollars & Sense: Real World Economics, offered by g

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The owners of a well known East Los Angeles taco vehicle need new cooking utensils and a far more appealing indication. The proprietors, wife and husband, visit a dependable community company for a reputable session of individualized problem-solving, and so they come away with a minimal interest loan of $7,500 enabling them to maintain their enterprise.

Things rarely get therefore well for small enterprises in the economically struggling communities in Southern Ca just like East l . a ., where per capita earnings is significantly less than $15,000 per year. Conventional mainstream banking institutions will never offer that loan to these tiny business owners, and community development finance organizations might only provide micro-loans at rates of interest between 9% and 18% (plus costs), which is often unaffordable, and often have actually needs for credit and paperwork that exclude many business that is small. The rest of the finance institutions are storefront payday lenders who increase loans needing no security, however with interest levels that averaged 372% in Ca in 2016, and which regularly lead to trapping borrowers in a period of financial installment loans near me obligation. [Read more…]