SAN FRANCISCO - Mayor Gavin Newsom and Treasurer José Cisneros today announced the launch of Payday Plus SF, an alternative to traditional payday loans. In partnership with six San Francisco Credit Unions, PayDay Plus SF will provide small dollar loans to city residents, with low interest rates, financial counseling, and an extended repayment plan. The program is designed to help San Franciscans avoid high-interest rate payday loans that often trap borrowers in a cycle of debt.

"We applaud the leadership of Mayor Newsom and Treasurer Cisneros in launching PayDay Plus SF," said Anne Stuhldreher, fellow of the California Asset Building Program at the New America Foundation. "Too many San Franciscans turn to payday loans as a short-term solution and end up instead in a long-term debt trap. This commonsense program will help residents who face a cash crunch and need an emergency loan to fix their car, pay for medicine, or keep the lights on."

While for-profit payday lenders can charge annual interest rates of over 400%, under PayDayPlus SF, partnering Credit Unions will set an annual interest rate limit of 18%. In addition, borrowers can pay the loan back over six months and will have access to financial counseling, and the ability to build good credit through a payment plan.

The New America Foundation has long called for the more affordably priced alternatives in the marketplace and for more robust consumer protections in California and throughout the country.

"There are now more payday lending establishments in California than McDonald's and Starbucks combined," said Stuhldreher. "We need financial institutions to step up with better products, like PayDay Plus SF, and policymakers should enact more robust consumer protections."

The official announcement of Payday Plus SF was followed by a panel discussion and convening attended by more than 100 community leaders and hosted by the New America Foundation. The discussion highlighted the problems with payday lending, what's happening in Sacramento and Washington, DC to address them, and ways to spread the word about Payday Plus SF.
 
For media requests, please contact Elizabeth Wu at (510) 295-9859 or wu@newamerica.net.