Microloans

KCADV offers a microloan program to help survivors establish or improve credit and reduce debt as they move toward financial stability. Microloans help individuals establish or improve credit when paid on time and used in conjunction with at least one other open and active line of credit.

Payments are reported to the three major credit bureaus: Equifax, Experian, and TransUnion. So, it is critical that payments are made on time and that the loan is paid in full. A good credit score helps individuals access credit, removes potential housing and employment barriers, and saves money over the long term.

Suggested uses for the microloan include:  housing expenses, payments on past due debt, unexpected expenses (ie: car repairs, medical expenses), or opening an emergency savings account.  Unless there are extenuating circumstances, KCADV requires that loans be issued to a vendor of the applicant’s choosing, such as a landlord, utility company, mechanic, etc.

Who can apply?

Survivors of domestic violence who are working with an advocate at a KCADV member program may apply for unsecured microloans.  Applicants must have met at least three times with their program advocate before applying for a microloan.

What makes a good microloan candidate?

It is important that the advocate believe that applicants are able and likely to repay their loans in full.  A good microloan candidate has steady income, is able to pay their basic household expenses each month, and is in regular contact with their advocate.

How does a survivor apply?

After meeting with a client at least three times, if an advocate determines that the client is a good microloan candidate (can afford monthly payments in addition to all other financial obligations), they can assist the client with the Application, Budget, and Terms and Conditions.  

Documentation of all sources of income AND a detailed budget that includes monthly payments for the requested loan must be submitted with each application.  If the applicant is an IDA saver, the monthly IDA deposit must also be shown on the budget. We encourage applicants to use a zero balanced budget, in which every dollar is allocated to a specific budget area.

It is very important that advocates thoroughly review the Terms and Conditions with each applicant.  Advocates will fax, mail, or email applications to Elizabeth Anderson or Andrea Miller at KCADV.

What happens after an application is approved?

After approval, KCADV will notify the advocate that the application is approved.  KCADV will issue a check made payable to the vendor (or vendors) and mail the check to the advocate. Advocates will assist applicants in setting up payroll deductions or automatic payments, provide confirmation to KCADV, and release the check.  

Approved loans are assessed a $15 loan fee IF automatic payment is not set up. For example, a borrower whose $500 loan request is approved will receive a check for $485, but pay back $500 in 12 installments.

When are monthly payments due?

KCADV must receive a first loan payment NO LATER THAN the last day of the month following the date the loan was granted.  Automatic payments should be set up based on the client’s pay dates but MUST be received at least once per month.

It is the borrower’s responsibility to stop payroll deductions to KCADV when the loan is paid in full. Borrowers will receive monthly statements showing their remaining balance.

How much can a survivor borrow?

A survivor can borrow up to $500, but should not borrow so much that they cannot afford the monthly payments and meet all other financial obligations.  Loans must be repaid over 12 months. The amount of each automatic payment will be based on the amount of the loan and the number of pay periods per year. For example, a $500 loan to a borrower who is paid bi-weekly will have $19.23 ($500/26 pay periods) deducted from each check. A $400 loan to a borrower who is paid weekly will have $7.69 ($400/52 pay periods) deducted from each check.

Is there interest on the loans?

KCADV microloans are interest-free.

What happens if the client misses a payment or is late making a payment?

KCADV is required by our reporting agreement to accurately report payment information to the credit bureaus.  If a payment is missed or late, that information will be reported to the credit bureaus, and it can damage the borrower’s credit score.

If the borrower’s employment changes, it is their responsibility to make sure that payments continue. It is imperative that borrowers communicate with KCADV about any concerns regarding payments. KCADV is happy to discuss options for modifying loan terms.

What if a client defaults on their loan?
KCADV is required by our reporting agreement to accurately report payment and default activity to the credit bureaus and will report the loan as a CHARGE OFF after three consecutive missed payments.  Clients must understand that this can have a significant negative impact on credit scores, affecting opportunities to access housing, employment, and loans, including auto and home loans