Client: Redbud Financial Alternatives
Client Location: Hazard, KY
CDFI: Mountain Association
CDFI Service Area: KY, OH, VA, WV
Financing with support from the Finance Justice Fund
In Perry County, Kentucky, high-cost predatory lenders are responsible for $23 million in loans per year, resulting in $2.6 million in fees annually. Because there are few federal credit unions serving southeast Kentucky, there are no alternatives for personal loans if your credit does not meet a traditional bank’s standard.
About a decade ago, Housing Development Alliance (HDA), an affordable housing nonprofit serving the area, began to work on a solution to this widespread problem. In 2016, HDA started Redbud Financial Alternatives, a nonprofit community development financial institution (CDFI), to offer financial alternatives and education for residents of Perry, Breathitt, Knott, Leslie, and surrounding counties.
After the historic floods of 2022 that devastated communities in Eastern Kentucky, Redbud launched a new appliance and home repair fund for flood victims using a special capital investment from fellow CDFI and partner Mountain Association.
In the three hardest hit counties in the region alone, it’s estimated that 4,667 homes were flood-affected, with 3,293 damaged and 432 destroyed. James Caudill, CDFI director at Redbud, said, “We were worried that people would turn to high-cost lenders in the months after the flood, trapping people who already face financial burdens into a deepening debt cycle.”
In the immediate months after the floods, Redbud supported flood victims with financing for all new appliances for new homes built out of the flood zone, along with financing to replace flooded vehicles and flooded HVAC systems.
Redbud Financial Alternative’s sister organization, Housing Developing Alliance, recently completed the development of Gurney’s Bend, an affordable housing subdivision in Hazard, Kentucky, built safely out of the flood zone to accommodate some of the flood survivors. Photo credit: The Holler Creative
Since its inception in 2016, Redbud Financial Alternatives has issued more than $2 million in loans, with $1 million issued in just the last 15 months. This funding has supported 395 Kentuckians in saving more than $300,000 in interest and fees. Loan funds from the Mountain Association will support Redbud in continuing to carry out and expand this important work, specifically for flood victims.
“People want to stay in their homes where all their memories are,” Caudill said.
Additionally, Redbud offers clients financial education and a financial action plan for each client. This may include one-on-one credit counseling, budget counseling, check-ins, or application recommendations so they can develop and practice good habits and skills that enable them to build personal assets.
Visit Mountain Association’s blog to read more about their work with Redbud Financial Alternatives.
See photos from OFN’s visit to see Mountain Association and Redbud Financial Alternatives’ work on the ground in southeast Kentucky in June 2022, just before the floods.
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