When we were first approached by Native American tribes to help them develop emergency cash loan products we were initially skeptical. Our technology platform has been successfully used by several banks but can Native American tribes make loans in the same way that banks do?
It turns out they can. The sovereign right of Native Americans to conduct business activities both on and off the reservation is firmly established in both treaty and case law. But what about the business case?
It’s no secret that traditional banks have been slow to meet the needs of underbanked consumers (60 million US adults according to the FDIC) who don’t have access to mainstream credit or use non-bank financial products such as payday loans. Recent regulatory activity has further limited consumer choice and reduced competition among financial providers. This has had a devastating effect on consumers’ pocketbooks. This year alone, 20 million Americans will pay over fifteen hundred dollars in bank overdraft fees according to the FDIC. In fact, banks collect $40 billion a year in overdraft fees at rates (over 3500% effective APR according to the FDIC) that make payday loans seem inexpensive by comparison. Consumers need more options.
What excites us about working with Native American tribes and other forward-thinking lenders (including some banks) is their desire to create innovative new products that are better than what’s offered today. For example, when the Chippewa Cree Tribe came to us they asked us if our technology platform could deliver an emergency cash product with the following attributes:
- Installment loan rather than a payday loan to eliminate the cycle of debt and ensure that customers can pay down the loan over time or pay it off early with no early payment penalties
- Price to the consumer that is significantly lower than a payday loan and continues to decline with each additional loan – ultimately as low as 10% of a payday loan rate
- Loan amounts up to $2500 to help consumers with larger financial needs than those served by traditional payday loans
- Reporting to credit bureaus to help consumers rebuild their credit ratings with successful payment history
The result of this development effort with the Chippewa Cree is a product called Plain Green. Plain Green has lower rates and more flexible payment options than almost all other mainstream emergency cash loans.
Check out some startling comparisons here…
We’re proud to provide the technology that powers loan products offered by lenders including the Chippewa Cree’s Plain Green. Not only is sovereign lending a legitimate tribal enterprise that is here to stay, but in many cases tribal lenders are beating banks at their own game by offering better products for underbanked consumers. Furthermore, Native American lenders have established the Native American Lending Alliance to promote best practices and ensure effective self-regulation in the industry.
Launched earlier this year Plain Green has been a big win for both consumers and the Chippewa Cree. Over 120,000 customers have already received Plain Green loans and their response has been tremendous.
Just as exciting, Plain Green has resulted in economic opportunity for members of the Chippewa Cree. Dozens of tribal members are employed by Plain Green and every tribal member has already received a payment based on the success of the product. The tribe has even been able to rebuild a baseball field with revenues generated by Plain Green.
With Plain Green, the tribe wins and the consumer wins. Proof that innovation is the key to better and more transparent financial products.