Betterfi

BetterFi is a 501(c)(3) nonprofit economic justice enterprise and CDFI dedicated to transforming consumer credit in Tennessee to be more fair, more accessible, and a pathway out of predatory lending. 

We are scaling a permanent solution to the predatory loan problem by providing financial tools and credit as a means of avoiding– and escaping– predatory debt traps. 

More at www.betterfi.co.

The Payday Loan Problem

BetterFi conservatively estimates that more than 26,500 households in Hamilton County spend upward of $110 million in predatory loan interest and fees every year– funds that are diverted away from our most economically precarious and vulnerable neighbors' essential spending to a small number of payday, title, and flex loan companies.

Despite the notoriety of payday loans, the most common predatory loan in Tennessee is called "flex credit." Imagine an XL payday loan with fewer steps to trap people and a streamlined process to wage garnishment.

With a typical annual percentage rate (APR) of 279.99%, someone borrowing a $2,000 flex loan can pay $465 each month and never pay down their loan. We have seen this happen, but usually we see worse: most flex loan borrowers cannot keep up with the outrageous interest and fees month after month.

One of BetterFi's first clients in Chattanooga was a woman getting by on less than $1,400 per month. She borrowed $2,000 in flex loans and, despite managing to pay an average of $450 per month for nearly a year and a half (more than $7,500), owed more than she originally borrowed. 

Flex loans are designed as traps. If someone makes minimum payments on a $2,000 flex loan– if they even can afford to do so over and over– they can pay $9,090 over two years and still owe nearly $1,000. Whereas paying only the interest and fees on a $2,000 flex loan would be $465 per month, $2,000 in credit from BetterFi can be paid off in total with 12 monthly payments of $193.

A Viable Solution

The unbanked and underbanked turn to predatory debt for a number of reasons, but one major reason is borrowers' failure to meet the credit criteria of highly regulated conventional financial institutions like banks. Banks say it is too expensive to make small loans, but that does not mean that triple-digit-APRs are necessary.

BetterFi believes that we can create access to credit and pathways to "bankability" responsibly– meaning at costs that are equitable and fair. To that end, we have developed tools that address the spectrum of needs that the underbanked face: escaping predatory debt, building savings and credit history, and understanding their personal finance.

BetterFi's primary program involves helping people escape the predatory debt trap. Our typical client saves more than $4,750 compared to a predatory loan of the same size and term. Since the average monthly income for BetterFi clients is $2,167, that means we effectively return two months of income to each client. To date we have saved clients more than $3 million.

In addition to our ReFi with BetterFi program, we offer directly and through partner organizations:

Cash/Flow Snapshot	Savings + Credit Builder	Credit Review
BetterFi's Cash/Flow Snapshot uses technology to instantaneously analyze a client's past 12 months of bank statements, giving insights to their monthly cash flow trends and spending across nearly 100 categories. Know where your money is going.	BetterFi's Savings + Credit Builder enables clients to work toward a savings goal and benefit from credit reporting as if they were paying on a loan. Clients pick a savings target, pay toward it every week or other week, and BetterFi can report it as a loan to the three major credit bureaus to either establish or rebuild credit.	BetterFi's Credit Review involves us doing a "soft" credit pull and reviewing it with a client, giving them an opportunity to understand what collections, tradelines, and inquiries are affecting their score and giving them concrete ideas for improving their credit.

By charging a fair rate, BetterFi is also unique among nonprofits: at scale, BetterFi will be able to greatly reduce reliance on donations and grants– perhaps entirely. 

More numbers at the tab "Impact by #s."

With every family helped and loan disbursed we are getting closer, but your support gives us what we need most: more time.

Working Together

Finally, BetterFi does none of this in a vacuum.

We partner with banks, civic organizations, governmental entities, nonprofits, schools, and businesses to find clients, gain support, collaborate on projects, provide financial coaching workshops, and file free tax returns. 

Here are just a few of our partners:

BetterFi news available at betterfi.co/news.

Feel free to reach out to us at hello@betterfi.co or 423-299-4033.