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Capital for Communities: CDFIs Innovate on Small Consumer Loans

Author

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  • Noelle Baldini

Abstract

Nearly two out of three Americans do not have sufficient savings to cover an unexpected expense of $500.1 Further, income uncertainty and volatility cause many families to experience spikes and dips in their monthly budgets, often leaving insufficient capital to cover expenses. With limited access to traditional lines of credit, many consumers turn to small loan products to weather a financial shock or to smooth their income fluctuations. While predatory, expensive products can lead consumers into a cycle of repeated usage and mounting debt, consumer-friendly products can provide the opportunity to build credit and improve financial capability.

Suggested Citation

  • Noelle Baldini, 2016. "Capital for Communities: CDFIs Innovate on Small Consumer Loans," Cascade, Federal Reserve Bank of Philadelphia, vol. 2, April.
    • Handle: RePEc:fip:fedpca:0016
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/community-development/articles/cascade/91/pdfs/01_capital-for-communities.pdf
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