New interest-free loan program launches in LA County to help prevent homelessness
Santa Monica Daily Press
by Grace Adams | Aug. 23, 2022
New assistance is available in LA County to people facing the prospect of losing their homes. The Short Term Eviction Prevention (STEP) Fund, a program funded by the nonprofit, 1p.org, is launching a pilot program to give out 1,000 micro loans of up to 2,500 dollars to individuals at risk of eviction or dealing with other housing-related challenges.
Adam Miller, the founder of the STEP Fund said he started the program in response to research showing that many people lose housing as the result of some type of financial shock.
“It could be a car accident, a trip to the hospital, something that happens with work- in any one of these cases, the person gets off track and it can lead to a cascading series of issues which prevents them from being able to pay rent and ultimately getting evicted.”
Miller said that the goal is to provide people in these situations with the money they need to survive a short-term crisis and help them to become financially stable.
To be eligible to receive a loan from the STEP Fund, a person must be below the area median income and demonstrate they are at risk of eviction or in need of assistance to pay bills or secure housing. The loans are interest-free and recipients have three years to repay them.
The STEP Fund’s model is currently being studied by the University of Notre Dame’s Lab for Economic Opportunity. While it is too early to know the full extent of the results, and there has been debate about how effective micro loans truly are, Miller is hopeful the program will reduce homelessness by preventing people from becoming unhoused in the first place. According to the Los Angeles Homeless Services Authority, 82,955 people became homeless in LA County in 2019.
The fund conducted a small-scale pre-pilot of the program last year, giving out 35 loans to eligible people in the county. Courtney Bailey, a mother of five young children was one of the recipients.
In the fall of last year, Bailey got a call she had dreamed of receiving. A four bedroom apartment in an income-based rental unit was available. It was far bigger, more spacious and well kept than her home at the time.
“My situation was not the best, our apartment was super small, there were a lot of repairs and the landlord wouldn’t pay for anything,” she said.
Bailey was thrilled by the news, but then came the caveat- the new apartment was only hers if she could pay the $500 move-in deposit within ten days, something she knew she couldn’t afford to do.
“At the time I was on leave due to COVID, so I was on leave without pay basically,” Bailey said. “The money I did have was used for my children and food and trying to stay afloat with stuff like that.”
She told the person who had helped her find the new apartment about her situation and he connected her with the STEP Fund. Within a week she had applied and been approved for the loan and the STEP fund sent the money directly to the new apartment to secure her spot. Bailey has since gone back to work as a mail clerk at the post office, graduated college and written a children’s book. She said none of it would have been possible without the loan and now that she is in a better place she has already started making payments and is determined to pay it back as soon as possible.
“I feel like I’m starting to gain some ability to have financial freedom,” she said. “My goal is to pay it back before the three years.”
Miller said he expects there to be some loans that don’t get paid back in full but said the program has accounted for that in its funding model. However, he hopes that the majority of the recipients, like Bailey, will want to pay it forward and allow the program to become self-sustaining- providing loans to more people who need it, when they need it.
For more information on the project, visit www.thestepfund.org.