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‘Rent Banks’ Offer Loans to Tide You Over

Municipalities and non-profits sponsor help for some when homelessness looms.

By Christopher Cheung 13 Dec 2016 | TheTyee.ca

Christopher Cheung reports on affordable housing for the Housing Fix. 2016-17 funders of the Housing Fix are Vancity Credit Union, Catherine Donnelly Foundation and the Real Estate Foundation of B.C., in collaboration with Columbia Institute. Funders of special solutions reporting projects neither influence nor endorse the particular content of our reporting. Other publications wishing to publish this article or other Housing Fix articles, please contact solutions editor Chris Wood here.

In 2014, Nick Seguin, then 26, was a student and also worked at a call centre. He lived on his own in a basement suite in Surrey, B.C., and he always paid his rent. Then he got sick.

Seguin couldn’t work. His employer put him on short-term disability leave. For the first time in his life he was forced to use a food bank to eat. Three months passed. He was rejected for employment insurance benefits, for medical employment insurance, and for welfare. Seguin fell behind on rent and was about to be evicted.

But then he found Surrey’s rent bank.

Rent banks lend money to tenants to help prevent evictions and possible homelessness. They’re typically funded by governments and philanthropic organizations, and are almost always interest-free.

Canada’s first rent bank opened in Toronto in 1998. Now they can be found across much of Ontario, including Ottawa, London, Hamilton, and the York and Waterloo regions. In B.C. they also exist in Vancouver, Kamloops, and the Fraser Valley.

Seguin got the loan he needed from the Surrey rent bank operated by the Sources Foundation. After getting well and returning to work, he paid the money off before it was due by working overtime.

He was so grateful for the assistance that he shared his experience with the foundation for its website. “It was so worth doing,” Seguin told Sources, that “I wanted to show my appreciation that [the] rent bank heard my cries for help.”

Among the great strengths of the banks is the morale boost, says Sandra Galbraith, the director of employment and community services at Sources, which manages the rent bank where Seguin got his loan.

“You’re showing them you trust them,” she says of her clients. “Rent banks give people who are generally getting by against all odds, a chance.”

While different rent banks have different loan requirements, a common one is being able to prove that you normally have a steady income, or that you will in the near future. “It’s only because a crisis comes up that they need a loan,” Galbraith explains.

That crisis can be anything that halts an individual’s income: getting too sick to work like Seguin, having hours cut, having to stay home to take care of a sick child, or having one income earner in the household suddenly leave. Galbraith shared the story of a client, a mother, whose son left and stopped paying half the rent.

An income crisis can also be something that forces an individual to spend their rent money elsewhere: medical expenses, a car breaking down, or having to travel to attend a funeral or visit a dying relative.

NDP MLA Judy Darcy’s office recently helped set up a rent bank in her constituency of New Westminster, securing $35,000 from community organizations, many of them credit unions. It was approved by that city’s council in October.

“We’ve talked about the housing crisis in general, but it’s becoming a part of every other crisis that people are dealing with,” Darcy said.

Darcy shared one example: a woman who visited her office was fleeing domestic violence. She had an income, but needed extra money for a deposit to rent somewhere new. For those similarly looking to escape abuse, knowing there’s support to move into new housing might make the decision to leave easier.

Temporary crises can happen to anyone, said Darcy, noting it’s “not about income level.”

No hidden strings

Rent banks also help keep people out of the clutches of loan sharks.

Many people earning low incomes nonetheless make just a little too much to qualify for social assistance. That was Seguin’s problem. Some turn to payday loan companies that charge high interest rates for quick cash. It’s a path that can quickly lead to bankruptcy.

Gladys Wong has seen it happen more than once during her time as executive director of Toronto’s Neighbourhood Information Post, the community service provider that opened Canada’s first rent bank.

“Some clients have to dig themselves out of a hole, having built up so much interest with the payday loan company,” said Wong. “It’s always better to get the interest-free loan.”

The payday loan industry has been called predatory, and the “crack cocaine” of the debt world.

While Canada allows the industry, individual provinces determine what rates and fees are considered criminal and some lenders have faced legal action. For those in dire need of cash for rent or groceries however, they remain a temptation.

Long-term solutions

In Toronto, the Neighbourhood Information Post offers personal counselling and tips on sorting out finances as well as help finding housing.

“It’s not just about giving out the money,” said executive director Wong, “it’s about providing a more long-term solution.”

Surrey’s Galbraith would agree. Her Sources agency also offers one-on-one help for applicants.

“Budgeting is challenging for anyone, but when you have such a limited income, it’s even more challenging,” she said. In the worst situations, Sources will write off a cash advance to a client as a “groan” — a loan if a client can pay it back, a grant if they can’t.

The government of Ontario formerly funded municipal rent banks through a provincial rent bank program. It now funds 47 NGOs across the province that manage both affordable housing and homelessness services, many of which also operate rent banks.

But provincially funded rent banks seem to be unique to Ontario. Vancouver’s, for example, is instead funded by the city and two foundations.

Still, other Canadian cities may see rent banks in the near future. A 2015 housing policy review in North Vancouver proposed starting one there. And Saskatoon’s city council is similarly considering a rent bank as part of its anti-homelessness strategy.

Rent banks are no guarantee of financial assistance, and they’re certainly no free ATM. At Sources last year, 474 people applied for a loan. Only 29 got one. But all, Galbraith insists, “get help,” even if it’s only financial advice, or a suggestion for finding funds elsewhere.

And when clients like Seguin pay back their loan?

“It’s an incredibly empowering experience for people,” said Galbraith. “You can physically see their reaction. He [Seguin] was so proud of himself.”  [Tyee]

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