Imagine yourself with less than $1,000 in savings. Suddenly, there’s an emergency: Your car breaks down; an unexpected medical expense is incurred.
What do you do? Where do you go?
For too many, the answer might be a payday loan — a small dollar, high-cost form of borrowing that in Virginia, according to the Center for Responsible Lending, can have an interest rate as high as 173 percent. The Federal Trade Commission reports an average nationwide payday loan interest rate of 390 percent or more.
Members of the St. Vincent de Paul Society want to help the needy avoid that financial fate and give them breathing room to consider longer-term outcomes through an Alternative Loan Program.
Founded in 2015 by the Arlington diocesan SVdP District Council, the ALP initiative was an innovation of George Degnon, original SVdP loan committee chair, who passed away in October 2022.
“It was George’s purpose — to reach out, hold a hand to somebody that’s on the ground, and pull them up,” said Paul “Korky” Korkemaz, district council president. “That’s why we’re honoring him by continuing and trying to expand the program.”
The maximum loan amount is $2,000. Potential borrowers submit an application to the loan committee, stating their intended purpose for the funds. A “soft” credit report detailing debts and defaults is reviewed — but isn’t necessarily disqualifying, since all loan amounts are backed by a secured SVdP deposit with Apple Federal Credit Union, the ALP banking partner.
Employment is verified, borrowers are required to open an Apple member account with a $5 deposit, and all must attend free financial counseling offered by Apple. Interest rates are kept intentionally low — between 3-5 percent annually, simply to cover administrative costs — with monthly payments to Apple averaging $55.
“Our contention is that people get into these financial problems not because of a flaw in their character; not because of any moral failing — it’s circumstance; it’s a lack of financial literacy, which is not their fault,” said Roberto Bacalski, who coordinates the ALP.
Parish SVdP conferences regularly assist the disadvantaged with rent, utilities and groceries, so the ALP is “essentially a way to supplement — but not replace — the traditional St. Vincent de Paul direct assistance,” said Bacalski.
The SVdP loan program disbursed $36,260 in loans between 2020 and 2022. By August 2022, $15,000 of those loans had been completely paid off. There are currently about 50 active loans.
Korkemaz said the results can be nothing short of life-changing.
“I know of one case where we helped with a car,” Korkemaz recalled. “The lady had zero resources — she was working, but her car was in bad shape; she might not make it to her job. We were able to get her a good deal on a Kia — and you would think we gave her a million dollars.”
Another loan helped a Spotsylvania homeless man secure a trailer to live in, enabling him to get off the streets.
“We couldn’t ask for a better partner than Apple,” said Korkemaz.
“Apple is a community financial institution that is founded on people helping people and doing the right thing,” said Katie Knight, Apple Federal Credit Union’s community engagement officer. “The folks that SVdP is helping through the alternative loan program are typically in crisis and have very few options for support. The loan program not only gives these folks access to funds they need, but it’s a tool to help them begin to build their own credit, which may help put them in a better borrowing position in the future.”
Reflecting on the Vincentian charism, Korkemaz said, “One of our mottos is, ‘No service is foreign to the Society.’ Typically, we provide financial assistance — but in this way, we’re giving people a helping hand to do more strategic things, rather than temporary. So, it fits our mission perfectly.”
Heatherington is a freelancer in Alexandria.
