CDFI Redbud Reaches $2 Million in All-Time Lending
Hazard, KY (May 19, 2023) – Community Development Financial Institutions (CDFIs), like Redbud Financial Alternatives, Inc. (Redbud) located in Hazard, often prove to be invaluable to vulnerable communities in times of crisis.
Following the devastating flooding last July, Redbud stepped up to help hard-hit Eastern Kentucky homeowners, offering low-interest loans to replace autos and HVAC units. CDFI Director James Caudill said there’s been an increase in the demand for lending since the flood, and now, Redbud has hit another milestone in its efforts to provide affordable loans in the region, having made $2 million in fair personal loans.
“We reached the $1 million milestone in March 2022, and reaching the $2 million milestone in just 15 months is an indication of how high the demand for affordable financing options is in our region,” Caudill said.
“Our worry was that in the months after the flood, our community members, who were desperate to return to normal, would turn to high-cost lenders who are quick to make their services accessible to people who need money,” Caudill continued. “Predatory lenders in our area offer loans with speed and ease that come with a price of high fees and short repayment terms, trapping clients already facing financial burdens in a deepening debt cycle.”
Caudill noted the interest rate for a consumer loan from Redbud can be as low as 3.25 percent. With the majority of Redbud’s loan recipients being low to middle-income, Caudill feels that his CDFI, which works closely with local nonprofit the Housing Development Alliance (HDA), has helped struggling families and flood survivors repair their homes and recover.
Mountain Association, which is headquartered in Berea but has an office in Hazard, will fund a new home repair loan product that Redbud will be rolling out soon.
Caudill explained that Redbud’s loans have collectively saved 395 East Kentuckians over $300,000 in interest and fees. That money stays in the community, which cannot be said of predatory lenders, which Caudill said are often part of large national chains.
Lindsey King, who lives in Perry County and works as a construction trainer and carpenter in HDA’s Hope Building Program, turned to the CDFI for help when she found her car loan becoming increasingly unaffordable.
King said Redbud refinanced her car loan from a 22.9 percent interest rate down to an interest rate of 6 percent, saving her $200 a month.
“I’ve been working towards getting a home,” King said. “I’m a single mother of two kids. We all three have always either shared a bedroom or have been in a small 2-bedroom apartment. I would have never got my credit score up and my car payments lowered, if it hadn’t been for Redbud helping me refinance my car loan and guiding me with tips to improve my credit.”
“They have worked with me and got me in the position of being able to get a home, which is something I never thought I’d be able to do,” King added.
Caudill said his CDFI is able to help people like King due to critical funding support from Park Community Credit Union, Religious Coalition Impact Fund (RCIF), Opportunity Finance Network’s Financial Justice Fund, among many others. Redbud also anticipates more growth and lending over the next year as it is currently undergoing strategic planning to serve the region better.
Redbud primarily serves those who live in and/or work in Breathitt, Knott, Leslie, Perry, and surrounding counties in East Kentucky. To learn more about Redbud’s fair loans and financial education programs, or to inquire about making an investment in Redbud, visit redbudloan.org or call 606-716-6100.
