Praising banks as a ‘lifeline’ for low- and moderate-income Canadians
TORONTO — Luz Lopez-Dee was on the verge of deportation years ago when she missed a letter from the government that was crucial for her to receive pension payments.
The pensioner was anxious about how she was going to pay the rent, as she settled stopped payments and cared for her husband, who had recently had a stroke and used a wheelchair.
But much of the BC woman’s worry dissipated when she found out about a rental bank that had lent her enough money to avoid eviction.
“When you are faced with a crisis, you wonder what am I going to do and where am I going to go? But knowing that there are resources available, when you need help, that’s huge,” said she declared.
Rental banks, like the one that helped Lopez-Dee, lend money and sometimes offer grants to low- to middle-income people at risk of eviction.
They’ve been around for decades, but in recent years others have popped up to keep pace with rising rents, the country’s ongoing struggle to combat homelessness and the ramifications of COVID-19.
Toronto has had a rent bank since 1998, while Manitoba launched one last year. BC Rent Bank, which supports a network of rent banks, started in 2019 in Prince George, Fraser Valley and Surrey, and expanded last November to cover all regions of the province. Saskatchewan politicians are also under pressure to create a rent bank.
Banks have different structures and offerings, but most operate through government or philanthropic donations and target low-income residents with short-term needs. For example, people who are struggling to pay the month’s rent or who are already behind on their payments but need to start a new job or get paid soon are often suitable.
While some banks only offer grants, others focus primarily on generally interest-free loans.
Lease banks say the model makes their offerings more accessible than traditional bank loans and less predatory than payday loans because they offer reasonable terms and appeal to those who may not have a credit rating. high credit or who do not meet other requirements set by financial institutions.
“We really try to help people avoid places like Money Mart and payday loans and these lending institutions that charge incredibly high interest rates and end up crippling people more than helping them in the long run” said Melissa Giles, a project manager with BC Rent Bank, which is administered by the Vancity Community Foundation and funded by the province.
Most people find out about rent banking, which she calls a “lifeline,” through local nonprofits when they are in or approaching a housing crisis. After completing a pre-assessment of their housing and financial situation, a case manager considers whether they are eligible for rent bank support or another assistance program.
To be eligible for a loan, individuals must be at least 19 years old, reside in the province, earn a low or moderate income, demonstrate that financial assistance will stabilize their housing beyond the immediate crisis, and demonstrate that they will have the ability to make repayments.
The loans total up to $3,500 per month and must be repaid within six to 24 months, Giles said.
Deferrals and deferments are offered if a recipient is having more financial trouble, but must be arranged before a missed or late loan payment or they may result in insufficient funds charges.
“Sometimes we see people who are going through a real temporary crisis ‘and they need something that helps them until maybe next month when EI kicks in or they go back to work’ , said Giles.
“Some people come back and pay in a shorter period of time and some people need that full two-year period.”
COVID-19 prompted many people to apply for rental assistance in the early days of the pandemic, Giles said. However, many canceled their applications when government assistance programs were launched and some provinces imposed rent freezes.
When the first cases of Omicron in Canada emerged and the number of people infected with COVID-19 rose again, Giles saw 118 pre-assessments filed in a single day and 300 requests for assistance within days.
Don Nichols observed a similar phenomenon in December at the Toronto Rent Bank.
“We knew that with the COVID 19 pandemic, we didn’t want people to be in undue financial hardship that they had to think about repaying those loans properly,” said Nichols, manager of Housing Stability Services and grants from the City of Toronto, which runs the rent bank with the community organization Neighborhood Information Post.
But programs are more than just money.
They offer dignity and a helping hand when people need it most, said Lopez-Dee, who turned to a rent bank for the second time after her husband died and bills rose. .
The rent bank helped her get back on her feet and since then she has spoken about it to everyone who listens.
“You might not need it today, but who knows,” she said.
“There is something available when you need it.”