Predatory lenders are consuming vulnerable Tennesseans. Here's an alternative. | Opinion

Lawrence Turner
·3 min read

After her husband died in 2020, Yolanda Rogers needed help paying her bills. Her sister, Gwen Miller, didn’t have any credit and didn’t know how to establish it.

The two sisters were strapped – and ripe for abuse by predatory payday lenders. Fortunately, they were referred to the Black Clergy Collaborative of Memphis and Hope Credit Union’s Borrow and Save program by their church, Christ Missionary Baptist. Once approved for small loans and given the support necessary to repay them, Yolanda was able to get back on her feet and Gwen to establish a good credit score.

The BCCM/HCU Borrow and Save program that helped the sisters get on – and stay on – solid financial ground was launched in 2021 to combat the predatory lending businesses that thrive across Tennessee.

By design, these companies’ practices have kept too many working-class Memphians, Tennesseans and Americans mired in debt. Sadly – and in contrast to surrounding states – Tennessee lawmakers also seem eager to allow predatory lenders to run roughshod over consumers for the sake of political donations.

Borrow and Save model desperately needed

The BCC/HCU program does the exact opposite and it’s working. Borrowers not only receive small loans and support to repay them, but accrue interest that comes back to them once their loans are paid off.

The Rev. J. Lawrence Turner, senior pastor at Mississippi Boulevard Christian Church (known as The BLVD), speaks at a service.
The Rev. J. Lawrence Turner, senior pastor at Mississippi Boulevard Christian Church (known as The BLVD), speaks at a service.

With $100,000 in committed funding and a mission to help our borrowers become financially secure, we’ve made over 50 referrals and processed 29 applications for loans of $1000 or less. We’ve also expanded the program beyond personal finance into auto and mortgage loans. The Borrow and Save model is desperately needed in a city like Memphis, which has the highest concentration of predatory lending companies in Tennessee. But its only a first step.

Predatory lending businesses abound nationwide, but in our state in particular. In fact, national giants like Advance Financial, Check into Cash and Title Max were founded in Tennessee and make a mint here, thanks to laws that prioritize their interests over borrowers.

According to a recent investigation by The Tennessean, these three major companies are among the top 20 contributors to state lawmakers since 2012. Advance Financial has been the single largest corporate contributor to our legislators over the last 10 years, spending more than $2 million in direct donations and $3.4 million in lobbying.

Create 'justice-driven' lending programs

In 2015, the legislature allowed payday lenders to introduce a new type of loan in Tennessee called the “flex loan.” Flex loans, unlike most loans, don’t require borrowers to produce collateral and can stick them with interest rates as high as 280 percent. The reason this entrapment of borrowers is possible is because the legislature did not put consumer protection policies in place, like an interest rate cap.

J Lawrence Turner
J Lawrence Turner

Combatting such legislation requires action on multiple fronts. First of all, I challenge the business community and institutional lenders across the state and the nation to create justice-driven loan programs similar to BCC/HCU’s Borrow and Save Program. We at BCC/HCU are more than willing to help mission-driven lenders create these types of programs.

Secondly, Tennesseans must demand our legislators stop making it easy for these companies to financially enslave our fellow residents of the great Volunteer state. Surrounding states put constraints on predatory lenders. In Alabama, finance charges may not exceed 17.5 percent of the amount of money loaned. In Mississippi, lenders cannot loan more than $500, including the amounts of fees. Why can’t Tennessee do something similar?

Changing the way these predatory lenders are allowed to do business will help people who are struggling – people like Yolanda and Gwen - stay afloat and feed their families, which will help their communities stay afloat too. And it will keep states like Tennessee from exacerbating the wealth gap that has plagued low-income earners for generations. When those who struggle begin to thrive, we all thrive.

Pastor Lawrence Turner is senior pastor of Mississippi BLVD Christian Church in Memphis and the founder of both the Black Clergy Collaborative of Memphis and the African American Clergy Collective of Tennessee. 

This article originally appeared on Memphis Commercial Appeal: How to protect Tennessee families from predatory lenders