Yet, this same business makes auto title loans to Texans at over 350% APR,” Texas Appleseed reported.

“The loan, intended to support small and mid-sized businesses, has a five-year term and includes no principal payments for two years and no interest payments for one year. LoanStar Title Loans, the Texas subsidiary of Wellshire Financial Services LLC, received a $25 million loan at 3.15% through the Main Street Lending Program. That means 39% of the average $1.4 million could be loaned out at 200% to 500% APR and not a dime has to be paid back. While most PPP funds were designated for wages, according to the SBA, up to 39% of the loan amount could be used for “nonpayroll costs” and still be forgivable. All told, statewide payday and auto title loan businesses received more than $45 million in PPP funds and continued to offer loans at interest rates of 200% to 500% during the pandemic. When most small businesses received on average $567,033 per loan, payday and auto title operators received an average of $1.4 million. In addition to the fast-pass, these lenders received more money. In fact, many of these loans were granted before it was clear that payday and auto title loan operators qualified.” 'Thirteen of the fifteen operations obtained the loans within the first month of the program rollout. 'They were also among the early recipients of the funds,' the report said. (According to, Gooden’s 2020 election campaign received $71,300 from the payday and title loan industry.) Gooden didn’t respond to a request for comment.Įventually, not only were the coffers opened to payday and auto title loan companies, according to Texas Appleseed, they also received preferential treatment. Lance Gooden, a Republican whose district includes parts of Dallas County and areas southeast, provided one of the signatures. Last April, Politico reported that 28 congresspeople wrote the SBA requesting “small-size nonbanks” be allowed to apply for PPP funds. They cried foul and sued, but eventually dropped lawsuits in favor of a swifter route: Congress. Initially, payday lenders weren’t allowed to dip into the PPP pool. 'The result has been a pattern of high APRs and increasing fees.” “Texas stands out among all but a handful of other states, with no caps on the total charges for payday and auto title loans,' Texas Appleseed reported.

In the end, she paid back $5,500 for the original loan to a company that received a $25 million loan from the Federal Reserve at 3.5% APR. In one example provided to Texas Appleseed, a South Texas grandmother received a $1,800 loan on her car title after she lost her job because of COVID-19. Interest and fees are often exorbitant, triggering a cycle of new loans and new fees for those who can't repay quickly. Payday and auto title loans are theoretically intended to cover unplanned expenses and by name imply that borrowers repay the loans with their next paycheck with auto title loans, cars serve as collateral. “ began to explore potential abuse of this funding, specifically as it relates to an industry with a history of trapping Texans into a cycle of debt - payday and auto title loan businesses,” the organization said in a recently released report. Texas Appleseed, an advocacy group for social and economic justice, studied a slim slice of the PPP money pie. Companies with savvy accounting departments scooped up the loans, while mom-and-pop business owners were left wandering around bank parking lots trying to figure out where the door was and how they'd been shut out so quickly. Not all went as planned, though, in terms of getting money to people who needed it most. To prop up the economy, Congress passed a $2 trillion CARES Act, which established the Paycheck Protection Program (PPP), a massive loan effort overseen by the Small Business Administration (SBA) intended to help those whose income vanished and, more important, lacked easy access to cash.

Many adjusted to working from home or, worse, income loss. How long would it last? How serious is this going to get? Restaurants shuttered. When the pandemic hit and shelter-in-place orders were implemented, uncertainty reigned.

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