State Employees Credit Union

Salary Advance Loan Program (SALO)

Brief Description of program:  State Employees Credit Union in North Carolina offers an alternative to payday lending. The Salary Advance Loan Program (SALO) fulfills the credit union’s desire to serve members and helps to break the payday lending cycle. The program allows members to take out salary advance loans without having to pay the fees and annual percentage rates between 200% and 900% required at most payday lenders. With the SALO program loans have a maximum ceiling of $500 and a minimum of $50 with an interest rate below 18% and no fees.  The loan plus accrued interest must be repaid by an automatic debit from an SECU account on the member’s next pay date.  This program is available only to those members whose paycheck is already on direct deposit with SECU.  The application and underwriting requirements are minimized to make these loans convenient and accessible.  Advances are available up to the credit ceiling and may be called in by phone. Basically, all anyone needs to get the loan is to be a member with a checking account, use direct deposit and not be in bankruptcy. 

In addition SECU has implemented a cash account aimed at breaking the payday loan cycle altogether and helping the member build personal savings.  The SALO Cash Account is a pledge against the salary advance loan.  Each time a SALO loan is granted 5% of the advance is deposited into the SALO Cash Account and accumulates interest at the prevailing passbook rate.  The cash is used to partially securitize the loan and encourages the member to save. If the member receives numerous advances the savings account grows by 5% of each loan advance and increases the amount of security pledged against the loan.

As part of the SALO loan and cash account programs the credit union has also implemented a way for the members to obtain financial education. The credit union has partnered with BALANCE, a consumer credit counseling service that is available free to members.  The service can help with debt restructuring, budgeting and education so members can better understand their finances.  The credit union usually recommends the member works with BALANCE after receiving three consecutive payday loans.

Contact person for program:  Jim Blaine, CEO, Phone number: 919-839-5000

For more information about SECU programs go to WWW.NCSECU.ORG