The $311 million Freedom First Credit Union, headquartered in Roanoke, Va., won the $100,000 Next Seed Capital Award from the Opportunity Finance Network according to an Aug. 15 release.
The grant will fund loans to refugees and permanent residents seeking to finance their immigration applications at the 47,000-member credit union, which was eligible for the award because it was recognized as a Community Development Financial Institution by the U.S. Treasury Department’s CDFI Fund.
Freedom First developed its American Dreamer loans to cover the costs of the citizenship process, which can range between $2000 and $5000, the credit union said in the release. Although most of the refugees and permanent residents have jobs, they often do not pay enough to cover the fees.
“In this country, immigration law is complex and many newcomers require personal guidance, along with legal and financial assistance, to successfully navigate the U.S. citizenship process,” said Dave Prosser, vice president for community development. “We recognized a need in our community to offer low-cost loans to help credit-challenged immigrants pay the costs associated with obtaining citizenship.”
Mark Pinsky, president/CEO of Opportunity Finance Network and a member of the award selection committee, praised Freedom First’s creativity.
“As the nation grapples with complex immigration challenges, Freedom First is leading the way with an innovative solution for the large and important immigrant market. This is another example of what CDFIs do best—fitting responsible and affordable financial products and services to the unique needs of the communities they serve,” he said.
The metropolitan area of Roanoke has been changing for some time, said Freedom First President/CEO Paul Phillips, and the credit union has changed with it. Over the past decade, he said organizations that help resettle immigrants in the United States have put a high priority on the Roanoke area, citing its lower cost of housing and numbers of employers willing to hire entry-level or lower-level employees.
In a release, Freedom First said Greater Roanoke has 14,218 foreign-born residents, and nearly 63% of them are non-U.S. citizen, which exceeds both Virginia and national averages. The majority came from Somalia, Vietnam, Bosnia, Croatia, Cuba and Iraq.
Prosser said the credit union provided the new residents a crucial first step into the mainstream financial services market and often moves them away from local check cashing firms that might speak their language but don’t offer services like savings accounts or tools that help build credit history.
In addition, Freedom First partners with organizations to help the credit union more effectively target those with the best chances for loan approval. Commonwealth Catholic Charities, which helps refugees complete green card paperwork, is one such partner. The credit union also works with local law firms that process legal citizenship requirements. The grant’s $100,000 would help about 30 immigrants move through the process in the first year, the credit union said, and Phillips and Prosser said they want the program to become self-sustaining after the grant runs out.
Freedom First has not yet decided how it will price the loans, but the men said the interest rate would likely be below market.