Gilchrist: Rent bank benefits outweigh any costs

January 18, 2013

By Tracy Gilchrist
Daily News City Editor

At my first newspaper job, I grossed $1,600 a month.

By the time I moved to the next one, I hadn’t paid down much of my student loan and began living on my credit card, paying the minimum balance every month.

I hit financial bottom when I realized I was visiting the bank machine weekly to see what American Express might spit out. That $50, even $25, made a difference to my quality of life.
To afford the damage deposit on an apartment for my next job, I had to ask family for a loan. Thankfully, that job allowed me to eventually pay off my debts and I pruned back my credit card use.

If I didn’t have family to help, I would have continued living on the edge and have no idea how I’d have managed if an emergency came up — a long-distance funeral, car repair, sick child to care for . . .

So I understand how one unexpected event could send an individual or family who are barely making ends meet into financial ruin. Without family or friends to rely on, where would a person turn?

It might be possible to get a payroll advance, turn down the heat to save on power costs, cut corners on the grocery bill, but with no cushion, the chasm grows. Even the most understanding landlord will not tolerate rent repeatedly being late and eviction becomes a very real possibility.
According to a Canadian Payroll Association survey, 57 per cent of Canadian workers would run into financial trouble if their pay was delayed by even a week.

This is why the new Kamloops Rent Bank will make such a difference. It offers one-time loans to people who don’t qualify for welfare, unemployment insurance, old age pension or other assistance, helping them through a difficult time with dignity, because it’s not a handout.

Homelessness Action Plan co-ordinator Tangie Genshorek says the working poor “are going over the edge into really extreme poverty and ending up on the streets.”

In last fall’s homeless count, 73 per cent of those living on the streets reported the reason for being homeless is that housing is either unaffordable or unavailable. According to the HAP 2012 Community Report, it costs $55,000 a year to leave a homeless person on the street (think trips to the hospital, providing emergency shelter and emergency services like the police in dealing with problems) and $37,000 a year to provide housing with support services.
So keeping people from heading over a personal fiscal cliff costs society far less than the alternatives.

Rent bank loans are restricted to rent and utilities like gas, hydro and land lines (no cellphones) and organizers expect loans to max out around $1,500 to $1,600.

Applicants must provide bank records and be clean of addictions for two years. They’ll be vetted by a social worker with training in finance, who will also offer budgeting ideas.

If this simple strategy of small, low-interest loans can keep working people from falling deeper into poverty, it will be valuable to our community’s well-being and loan recipients knowing they can continue to look after themselves and their families with pride.
tgilchrist@kamloopsnews.ca

Rent bank opens doors in February - Diversion from payday loans

January 14, 2013
By MIKE YOUDS
Kamloops Daily News Staff Reporter


Kamloops will soon have another tool for chipping away at homelessness and at the client list for payday loans.  A rent bank - a community lender of last resort for working poor who find themselves in financial crisis - is about to start.
The Kamloops Rent Bank will be available to assist individuals and families starting in February, said Tangie Genshorek, co-ordinator of the Kamloops Homelessness Action Plan.According to research, six out of 10 Canadians would be in financial trouble if they missed one paycheque, an indication of how great the need may be for emergency rent.
"It's key," Genshorek said.
By providing small, low-interest loans, rent banks assist people when they find themselves in crisis. The service will be provided only for people who are not receiving income assistance. They may have had a death in the family or a medical emergency, said Louise Richards, executive director of Kamloops and District Elizabeth Fry Society.
"Who knows? A lot of the time, people do want a loan," she said. "They don't want money handed to them."
Typically, there is a two-year payoff period for each loan.
The bank will be located at the society's offices at 827 Seymour St., where Janet Bakke will be in charge of assessing qualifications and need. Part of the loan process will involved financial education to ensure recipients don't get caught in the same bind again.
The Kamloops Homelessness Action Plan committee has been focused on a rent bank startup here for the past year, a need identified by the Changing Face of Poverty committee.
The idea is to keep people from falling into the payday-loan trap by offering a lower-interest alternative, something in the order of prime plus two per cent. Payday loans in B.C. can fetch as high as 23 per cent interest, which is not as costly as they were before B.C. brought in strict rules in 2009.
Toronto was among the first Canadian cities to start a rent bank, in the aftermath of the 2003 SARS outbreak when low-income hospitality workers were left high and dry by a drop in tourism, Genshorek said. Since then, the Ontario provincial government has taken up the initiative. Vancouver, the Fraser Valley and Prince George have recently followed suit.
"We're trying to prove its validity here," she said. "There's a real cap in programs available currently, everywhere but Ontario."
Roughly $39,000 has been donated by Interior Savings Community Investment Fund, the Kelson Group, United Way and The Stollery Charitable Foundation. The Kamloops rent bank working group is seeking additional funding.
Donations are accepted through United Way and the Elizabeth Fry Society.