"I thought CEO was a charity; why do you charge interest and make money on loans?"
This is a fair question. CEO is a non-profit organization, but that doesn't mean our loan products are free. Operating a loan fund comes with costs, including the technology used to manage online applications, contracts, payments, and management as well as the daily staff time needed to process and service loans.
So, by charging a modest interest rate and origination fees, we are helping to cover some of these costs, but we also currently rely on charity donations from other institutions to cover our other operational costs.
Additionally, we borrow money to use as loan capital to lend to our borrowers, and we pay interest on that money to our investors. Our investors often allow us to borrow below the current market rates, which allows us to pass along savings to our borrowers through competitive interest rates.
By charging interest, CEO can continue making loans to future borrowers. Any interest/fee revenue from our loans gets reinvested in the business to make more future loans and/or pay for operating expenses. CEO staff are all paid a fixed amount and receive no bonuses or commissions based on the number of loans we make.
Finally, we encourage all our clients to be educated financial consumers. We encourage borrowers to "shop around" and look for alternative costs of capital available. If a borrower is offered a lower rate elsewhere, we would expect them to take that loan instead of a loan from us. However, we offer fair rates compared to the general market rates, and we believe CEO's repayment options can be more flexible than other traditional financial institutions.