A Minnesota non-profit breaking the predatory debt cycle

Thank you all so much for the many incredible responses to our last newsletter about non-extractive lending, a form of debt where the lender does not make any profit from the borrower, and the lender’s sole intention is to support the borrower in their success and well-being.

There are many examples of non-extractive lending that are already working, giving millions of dollars worth of relief to borrowers who need it the most. 

This newsletter dives deep into an organization called Exodus Lending based in Minnesota, after these short announcements 👇

A Minnesota non-profit breaking the predatory debt cycle

By Leo Aquino

Debt is one of the most normalized forms of violence I have ever witnessed — especially predatory payday loans.

Payday loans are small-dollar, short-term loans that borrowers promise to repay using their next paycheck.  People who borrow payday loans are typically going through dire financial hardships, but don’t qualify for other forms of credit. The Center for Responsible Lending found that payday lenders in California are 2.4 times more concentrated in Black and Latine communities. Because of this, people of color are three times more likely to take out payday loans than white people. 

Between 2015 and 2024, the average interest rate on payday loans was 367% APR. For comparison, the average credit card interest rate right now is 22.2%. 27% of borrowers used payday loans 10 times or more. These borrowers were likely in an awful cycle of not having enough cash to pay down the loans and cover their basic expenses, which leads to more borrowing.

Having worked with people in this exact position, I’ve witnessed their pain firsthand. Unless a friend or family member comes through with an interest-free loan, it’s incredibly difficult to get out of this cycle.

Luckily, there’s a nonprofit organization called Exodus Lending in Minnesota offering that exact kind of support to their local community members.

Here’s how it works:

• You connect Exodus with your existing payday loans.
• Exodus buys your debt from your original lender. This is a process called refinancing, and the borrower usually initiates this process to get a lower interest rate on their debts. In this case, Exodus takes your interest rate all the way down to 0%.
• You make smaller, more manageable, interest-free payments to Exodus over 12 to 26 months. You're also paired with a financial counselor — for free — who helps you manage your finances.
• Ideally, you "graduate" from the program with less debt burdens, and never have to rely on payday loans again.

Since 2015, Exodus has refinanced over $1 million in predatory debts.

Exodus’ executive director Anne Leland tells Queer & Trans Wealth, “68% of all of our borrowers self-identify as being from communities of color, and 66% self-identify as female.” Some other impressive statistics:

• Since they started lending in 2015, Exodus refinanced $1,002,441 in predatory debts
• Exodus’ 907 participants had an average APR of 272% on their debts. 
• By refinancing, Exodus helped their participants save a total of $3,252,973 in interest and fees that they would have paid if they remained in the high-interest debt over the course of the year.

You are eligible for Exodus’ support if:

• You live in Minnesota — Anne offered me a list of similar organizations operating in different states listed below.
• You are 18 years or older.
• You have debt with an interest rate higher than 36%, including payday, pawn, and title loans.
• Your total predatory loan amount is $2,500 or less.
• You have proof of at least one month of steady income.

How Exodus Lending is funded

Exodus Lending is a nonprofit organization that gets:

• 15% of its funding from individuals
• 45% from corporate and philanthropic partners
• 40% from government funding

Similar organizations in other states and cities

Anne shared a few organizations that offer similar non-extractive lending services in other states:

• BetterFi in Tennessee, which refinances predatory debt. They don’t offer zero-interest loans like Exodus, but BetterFi helps Tennessee borrowers refinance their debt with an APR of 28% or less.
• Hebrew Free Loan Society (HLFS) in New York. There are HFLS locations all over the US. Jewish tradition prohibits lenders from charging interest rates because lending is supposed to be an act of kindness and charity. As a result, there are dozens of Jewish organizations that offer zero-interest loans for emergencies or debt repayment.

In a world that prioritizes people over profit, organizations like Exodus are the norm — not the exception.