Seven General Electric employees started with $40 of their own money and founded Freedom First Credit Union in 1956. Today they have grown to be a full-service community credit union with 10 branches and 36,000 member-owners.
Freedom First Credit Union’s CEO Paul Phillips said, “Helping people prosper is more than just a mission statement.” Their belief is that everyone should have access to affordable financial services.
The award from the Roanoke Branch of the NAACP Friday evening was in recognition for providing financial products and programs to those underserved by traditional banks.
Freedom First was designated as a Community Development Financial Institution (CDFI) by the United States Department of the Treasury. Sixty percent of their members are considered low or moderate income.
Rod Nunez, Assistant Vice President of Community Development, explained how they help those with challenged or no credit. Besides providing them with free checking and savings accounts, they also have access to what is dubbed a “Micro Loan” program.
These loans are personal loans for amounts less than $3000. “Banks won’t give a loan for less than $3000 because of the interest, the time frame and the amount of money is just not worth it to them,” said Nunez. Most of these loans are for home improvement, medical needs and car repairs.
“Without a credit card they don’t have a lot of options,” he said. That in turn is what leads people to seek high interest payday lenders. The payday lending cycle can make matters worse by turning a temporary crisis into an ongoing problem.
To combat the pitfalls of payday lending, Freedom First has what is termed a “Payday Alternative Loan.” The interest rate is no higher than 18 percent and the borrower has a month to repay.
The “Credit Builder Loan” helps those with tarnished credit by putting the borrowed money into a savings account, and having the borrower make payments in advance of receiving the loan. After paying off the loan, they receive the money plus the accumulated interest. “It’s like forced saving and at the same time helping them rebuild their credit with the credit bureau,” said Nunez.
The “Responsible Rides Program” provides access to affordable, dependable cars. For this service Freedom First partners with Total Action Against Poverty, New River Community Action and Enterprise Car Sales. Seventy-three percent of the car loans are to single parents. Ninety-four percent of the loans are to females. Since starting the program in January 2010, Freedom First has closed about 70 car loans.
Responsible Rides is available to households whose income is at or below 200 percent of the poverty level. Other requirements in the program include successful completion of three hours of free financial education and attendance of a two-hour vehicle maintenance class.
Freedom First offers free educational classes for nonprofit agencies, schools, and local businesses in the Roanoke and New River Valley areas. With classes like “Money Mondays” Freedom First helps families achieve economic success and a better quality of life.
In 2010 they donated over 1700 hours of community service and $64,000 in donations of time, money and student scholarships. Each year they organize a “Community Work Day” as a way of recognizing the value of nonprofit agencies.
