1P.org is proud to announce the official launch of its homelessness prevention program: The STEP Fund (Short-Term Eviction Prevention Fund). The program provides no-fee, 0% interest, non-punitive loans of up to $2,500 to low-income LA residents at risk of eviction.
“Because of the high cost of housing in LA, nearly a million Angelenos are just a paycheck away from not being able to cover their mortgage or rent. One financial setback, like a car repair or unexpected medical expense, can lead to someone losing their home. In fact, over 60% of people on the streets in LA today are there because of a financial shock,” explained Adam Miller, Chairman of 1P.org.
“The STEP Fund is introducing a new model of intervention: a no-interest, micro-loan program modeled off the decades-long success of micro-finance programs in the developing world to bridge the gap during times of financial difficulty and keep people housed,” said Miller.
Angelenos on the brink of homelessness can fill out an application on the STEP Fund’s website that takes approximately 10 minutes to complete. Applicants then meet with a client engagement manager for a brief video interview, verification process, and eligibility assessment – which includes factors such as capacity to repay and whether the applicant is below 50% area median income. The entire process, from application to funds distributed, takes about seven days.
The interest-free loans are for verifiable, housing-related expenses (rent, security deposits, moving costs) and are typically paid directly to landlords. Repayment begins 60 days after disbursement through small, monthly payments over the span of three years. Unlike other loan programs, the STEP Fund requires limited documentation, is available to those undocumented and underbanked, turnaround time is very quick, and the loan is non-punitive with no risk to the borrower. Since personal checks and Venmo are not sufficient payment options for a largely underbanked population, loan payments can also be made with cash at Walgreens and 7-Eleven through a partnership with PayNearMe.
The STEP Fund is an initiative of 1P.org: a new social enterprise focused on addressing some of society’s most intractable problems, including homelessness. Prior to launching the STEP Fund, 1P.org conducted extensive research on homelessness prevention. A study by the California Policy Lab, as well as a study by University of Notre Dame’s Wilson Sheehan Lab for Economic Opportunities (LEO), helped inform the strategy behind the STEP Fund by demonstrating how one-time cash assistance can decrease the likelihood that someone will become homeless. The efficacy of the STEP Fund is now being studied by LEO.
A STEP Fund pre-pilot program began in September 2021. More than 30 loans were distributed, with an average loan size of $2,000. 67% of the loans went to women, and 100% of the loans went to people of color.
While some of the applicants were impacted directly by COVID, many faced one-time emergencies which put them at risk of losing their homes. A woman in her mid-30’s applied after her father’s hospice care equipment raised her utility bills and caused her to fall behind on rent. Another woman in her late 20’s with two children had to choose between paying for her mother’s funeral or paying her rent. And a third woman with three children faced eviction when she was forced to stop working due to a high-risk pregnancy.
“We now have the processes and infrastructure in place to begin a large-scale pilot of the STEP Fund program, which will keep thousands of Angelenos housed. While we anticipate a relatively high default rate, we expect the vast majority of funds will be able to be recycled three or more times over the next 20 years. It’s a highly capital-efficient approach to addressing, or in this case, preventing homelessness. If the LEO research proves this model effective, it can be replicated across California and beyond,” said Miller, a social entrepreneur who founded LA-based Cornerstone OnDemand: a multi-billion dollar cloud computing company focused on educating adults.
To promote the program, the STEP Fund launched a digital advertising and transit advertising campaign concentrated in the city’s lowest-income zip codes to better reach its target audience and generate more applicants. In addition, 1P.org has partnered with a network of homelessness and community-based organizations across LA for referrals.
“We’re not trying to compete with other aid programs, but rather fill a void,” said Miller. “The STEP Fund was created before the pandemic and will extend far beyond it. The feedback we’ve received is that federal relief programs are not sufficient; they are either not reaching those in need or not reaching them quickly enough to avoid eviction. The STEP Fund solves that problem and keeps people housed.”