For the first time in more than a century of offering small interest-free loans to people struggling financially, the Jewish Free Loan Association (JFLA) has in excess of $10 million in outstanding loans.
Mark Meltzer, CEO and executive director of JFLA, calls it “our newest achievement.”
The Los Angeles-based agency reached the $10 million mark at the end of August. It’s the most money ever outstanding for the JFLA, whose loans range from a few hundred dollars to upward of $25,000 and are offered to residents of Los Angeles and Ventura counties.
The amount, said Elana Vorspan, director of program and marketing at JFLA, “reflects the need, reflects that we’re always trying to accommodate the rising cost of everything.”
Students make up a large portion of the 2,900 recipients of the current loans, and “a little over 50 percent of our loans outstanding are made to students of all kinds,” Meltzer said. JFLA offers funding for undergraduate and graduate students studying here and abroad, as well as for students attending technical and vocational schools.
Since its founding in 1904, JFLA has given loans to more than 350,000 people. JFLA recycles funds, loaning funds out immediately after they’re paid back.
JFLA receives approximately $100,000 annually from Federation to cover overhead costs — JFLA’s main office is in the same building as The Jewish Federation of Greater Los Angeles’ headquarters, at 6505 Wilshire Blvd.; JFLA also operates a smaller office in the San Fernando Valley that is open by appointment only.
Despite the rough economic times, JFLA has been successful at increasing loan amounts and loan distribution numbers. Meltzer attributes this success to JFLA’s 99.5 percent repayment rate, which allows the agency to keep money in circulation.
Meltzer also cited JFLA’s generous donor base as a reason for the success.
How do you maintain a 99.5 percent repayment rate? Two ways, Meltzer said: JFLA requires every borrower to have two co-signers, both of whom must have a steady source of income. In addition, relationships between JFLA’s loan analysts and borrowers, built on a person-to-person meeting, ensure that loans are repaid.
Among the recent student recipients is Nora Tahvilli, a third-year MBA student at American Jewish University’s (AJU) Graduate School in Nonprofit Management. Tahvilli was granted $6,000 this year and the same amount last year to help pay for her tuition.
Tahvilli, 31, repays JFLA at a rate of $75 per month through an automatic deduction from her bank account, and three months after she graduates, the amount will rise to $175 per month. It’s a system that works for Tahvilli, whose tuition is more than $20,000 annually. It helps ease the burden of rising education costs while allowing her to learn the value of repaying loans.
“It’s not a handout,” she said. “You’re paying for it.”
Sara Hahn, 28, a graduate student at Columbia University, received $3,500 from JFLA this year, and the same amount last year, to help pay for her schooling. Hahn’s annual tuition at Columbia is approximately $50,000.
“They’re great people,” Hahn said of JFLA, “and it’s a very simple process” to secure a loan.
JFLA also helped Hahn when she was 18 and an undergraduate at UC San Diego. After Hahn tried, but failed, to win a scholarship from Jewish Vocational Services, that organization referred Hahn’s parents to JFLA.
Tahvilli and Hahn also receive government student loans, and Hahn relies on a merit-based scholarship from Columbia.
The federal funds help, of course, but “I’m going to be paying interest on that,” Hahn said.
“Sometimes lending practices can be quite predatory,” she added, referring to loan agencies that, unlike JFLA, charge interest.
JFLA draws from more than 35 loan funds, including an emergency loan fund that helps with rent, car repairs and small medical or dental expenses. There are also funds for home health care, small businesses, lifecycle events, a green loan fund and more.
JFLA is working on a new loan program with the Breed Street Shul. Meltzer said it would likely revolve around a community center for non-Jews, and the hope is that it will launch next year. Other JFLA loan funds in the works include a diabetes loan fund, a loan fund for college students majoring in environmental studies and one for Alzheimer patient care.
JFLA has demonstrated the value of microloans in Los Angeles, but microloans are a popular way of helping the poor in rural communities abroad. In 2006, Bangladeshi economist Muhammad Yunus won a Nobel Peace Prize for establishing a community development bank in his native country that provides microloans to the poor without requiring collateral.
JFLA is the only interest-free micro-lender in Los Angeles. The concept of interest-free loans is rooted in the Torah, with the books of Exodus, Leviticus and Deuteronomy, as well as Maimonides’ Eight Levels of Charity, all providing justification for interest-free loans.
“The need is tremendous right now,” Meltzer said. “We are still in a severe economic slump, and we are trying to meet those needs of our borrowing community.”