Broward may offer emergency payday loans to employees
Concerned about predatory lenders, Broward County officials said they’ll consider offering employees emergency loans with lower interest rates.
Commissioners agreed to seek bids from loan providers who might want to team up with Broward County, offering emergency loans of up to $5,000 to employees, including those with poor credit ratings.
The county employs more than 5,000 people, and union leader Dan Reynolds of the Federation of Public Employees asked for a loan program two years ago, referring to somelenders as “vultures.’’
“People who live paycheck to paycheck shouldn’t be taken advantage of just because past financial challenges, short sales, divorces or medical problems have left them with blemished credit,’’ he wrote in a letter to County Administrator Bertha Henry.
Employee emergency loans are offered by the Broward County School Board, Leon and Seminole counties, the cities of Fort Lauderdale and Dania Beach, and other governmental and nonprofit employers in Florida. A thirdparty vendor provides the loan, and it’s paid back by the employee.
Commissioner Mark Bogen brought forward the proposal Tuesday, saying payday lenders charge exorbitant interest, trapping people into an endless cycle.
Bogen said there are more than 120 payday loan stores in South Florida, charging compounding interest that equates to 240 to 300 percent.
Payday lenders verify that a person is employed and offer the loans based on the fact that a paycheck is coming.
The company used by the School Board for the loans, BMG Money Inc. of Miami, said its 23.99 percent interest rate is annual and doesn’t compound. A person can pay the loan off early without penalty.
A loan of $1,000, if paid over a year, would cost the employee $1,160, Tom McCormick, chief operating officer atBMG, said.
In contrast, typical payday loan customers are charged $51 for a $500, two-week loan, or 10 percent. But most customers return 12 times a year, McCormick said, paying $51 every two weeks. He said that equates to an annual interest rate of 265.9 percent.
“The predatory lenders lie and pretend it is a oncein-a blue-moon product,’’ McCormick said, “and it is a debt trap. Once you are caught, you can’t get out.’’
Employees with good credit could obtain a loan from a credit union or bank, Bogen said. But a program like this would enable a person to build better credit, he said.
Under the BMG program, employees would be taught financial literacy. The company would have to submit a bid for the job; commissioners opted not to waive the competitive process.
In other action, Broward commissioners Tuesday:
TECHNOLOGICAL SNAFU: Agreed to throw out bids and re-do a competitive process to hire a firm to expand parking at PortEverglades. One of the five bidders, Cartaya and Associates, didn’t click “confirm” after uploading documents all day into the online BidSync system. County staff said the firm missed the 5 p.m. deadline by seconds, and was thus properly excluded. But commissioners said it was clear the documents were turned in before the deadline, and the failure to click “confirm’’ should be forgiven. Rather than waive the purchasing code, commissioners opted to throw out all bids and start over.
SALES TAX: Voted 6-3 to set a May 24 public hearing where commissioners will decide whether to put a seventh penny sales tax on the November ballot. “No” votes were Chip LaMarca, Marty Kiar and Mark Bogen. The sales tax currently is 6 cents on the dollar, so the increase represents a 17 percent hike. A competing tax proposal endorsed by many Broward cities would increase the sales tax to a seventh penny to pay for infrastructure improvements. The county’s tax could only be used for transportation improvements. At a Broward Metropolitan Planning Organization meeting Thursday, a decision is expected on which tax the cities will support. It remains possible both taxes would appear on theNovember ballot. If successful, which is considered unlikely, the sales tax in Browardwould rise to 8 percent. The tax applies to purchases of $5,000 or less.
bwallman@tribune.com or 954-356-4541. On Twitter @BrittanyWallman and @BrowardPolitics.