The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the tag “Justine PETERSEN”

Is Justine Petersen Ripping People Off?

Justine Petersen is a micro lender non profit specializing in making loans to unbanked individuals who tend to be mostly people of color. On many of their loans they charge a 10.5% interest rate where the market rate is less than 1% for a business loan. Is this fair? Even granting that their loan pool is significantly higher risk than a bank’s charging 10 times the interest is way out of line. Is anyone interested in this? Are they taking advantage of poor people? Written by Paul Dribin

Is Entrepreneurship a Good Thing for Most People?

A common thread of capitalistic and conservative thought is to encourage people, particularly poor people to start business. Many organizations and careers are devoted to this effort, charitable groups give funds to support the effort, and it seems to be as American as apple pie. I have had first hand knowledge of this effort as a volunteer for SCORE and Justine Petersen, a micro lender that promotes business lending.

I have discovered that the great majority of people starting businesses don’t have a clue as to what to do. Many times they have outsized and romantic notions of business ownership. A common theme is they can be their own boss. The reality of the situation is as follows, particularly for African American businesses located in the central city:

1. The cost of borrowing is difficult and high. Many borrowers get loans at 10% or more and have to pledge personal assets against the loan. If someone has a checkered credit history it is almost impossible.

2. There is not a significant market in the central city. Crime is also a barrier.

3. The great majority of new businesses fail.

4. It is easy for the party to end up worse off than before.

Justine Petersen is an organization that gets tons of support from the lending community to make loans to people who are outside the banking system. They charge 10% annually for this service and many of these loans fail. The Coronavirus situation has of course made things worse. They are doing a disservice to these folks who run up huge interest charges and often fail in their businesses.

Written by Paul Dribin

Great Groups in St. Louis

This blog tends to focus on the problems going on in St. Louis. Today I want to write about organizations doing really positive work to improve the community and the lives of people. Here are the groups:

1. Beyond Housing- This organization led by a brilliant and dynamic President, Chris Krehmeyer is doing amazing work. They are most active in the area around the Normandy School District doing total community development though the 24:1 program. Efforts include housing, a movie theatre, health facilities, a bank, matching funds for college and many other program. This organization goes about community development the right way.

2.Better Family Life-This organization located in north St. Louis is focused on housing, financial literacy, credit building, and housing counseling. They are the only community based organization I know that is attempting to resolve the violence on the streets of North St. Louis.

3. DeSales Housing Development Corporation- This organization has been successful for years in developing and rehabilitating housing in the Benton Park area and providing a wholistic approach to community development.

4. Rise- This non profit has worked for years to build and rehabilitate affordable housing throughout St. Louis and to provide support and technical assistance to non profits.

5. Justine Petersen Housing Corporation- This organization provides micro loans to small businesses, credit counseling, and provides sources of financing and saving to people who do not have a regular relationship with a bank or poor credit.

6. St. Louis City Acadamy- This private school provides a world class education to mostly low income African American students in the City of St. Louis. All the students receive scholarships.

7. Hawthorn Leadership School for Girls- This charter school led by Mary Stillman provides STEM education to girls regardless of economic background. They have now begun their high school program.

8, Boys Hope/Girls Hope- BHGH provides a 24 hour living environment and education to academically strong students from a difficult background who would benefit from a change in living conditions. The scholars are provided with 24:7 support, attend regular high schools, and most of them go to and succeed in college.

I am sure there are other worthy organizations but these are the ones for which I am familiar. Written by Paul Dribin

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