1. Why do people borrow from The Grateful Loan.org?

Our typical borrower has been referred to us by his/her attorney (we do not solicit business from plaintiffs). The client has been injured in an accident and is attempting to collect damages from a negligent party. The client needs money to pay medical bills, pay rent, make mortgage payments, pay school tuition, perhaps pay an auto loan or the grocery bill or child support. Lawsuits typically drag on for quite some time - in the meantime, the client needs the money. In times past, lawyers would sometimes loan money to clients, but that has become an ethical issue and jeopardizes the lawyer's license. In the last 15 years, dozens of firms have sprung-up bridge the gap, typically with outrageous fees and extraordinarily high interest rates. We provide an alternative to this industry.

2. How did we get the idea?

Our founder's brother is a plaintiff's attorney. Over the years, he has mentioned that a number of his clients turn to finance companies for help. Every time this happens, he is surprised how much his clients are charged. This piqued our curiosity. We started to research the industry and were astonished with what we found:

• Interest rates advertised as "2%" mean 2% per month (26.8% per year). But 26.8% annual interest cost is just the beginning of the costs of these loans because it excludes a long list of additional fees which are charged. Typical pre-settlement loans to plaintiffs sport annual interest rates from 60% to 96%, sometimes much higher.
• We found multiple examples of overnight processing fees and money transfer fees in excess of $100 for a $500 loan.
• Loans are not called "loans" but are structured as sale and purchase agreements - this allows the finance company to skirt usury laws.
• Typical legal finance companies include a litany of other fees, e.g., case servicing frees, case review fees, document management fees.

These fees combined with ridiculous interest rates are clearly abusive and we are determined to do something about it.

3. Why is The Grateful Loan.org structured as a social enterprise, not a nonprofit, i.e., 501(c)(3)?

The Grateful Loan.org does not seek, nor does it accept, donations - it is a self-funding organization. Our mission is to provide fair and transparent loans to people who are not being served well then publish data on the costs of doing this. We call ourselves a social enterprise because we are committed to reducing predatory lending and increasing transparency - maximizing capital returns is not on the list, though we intend to make a profit. We are organized around the principle of radical transparency - we intend to publish our costs of capital, loan default rates, margins on each loan and a host of other data that will bel helpful to those interested in eradicating predatory lending using market mechanisms.

4. Why do we call them loans?

When one person lends money to another, it is called a loan. This is what we do. What we don't do is try to skirt regulations regarding imputed interest rates. Technically, the Plaintiff's Pre-settlement Loan is structured as a purchase agreement (we purchase an interest in a pending legal settlement) but this is not to skirt usury laws, but rather to streamline the credit process and offer non-recourse loans to clients. Our purchase agreements carry imputed interest rates similar to credit cards and typically there are no additional fees. Our contracts offer a 30 day grace period: return the money in 30 days and the contract will be satisfied at no charge.

5. How can we charge a reasonable interest rate on small, non-recourse loans secured by law suits and stay in business?

We started The Grateful Loan.org as an experiment to see how many costs we can drive out of micro lending transactions. As such, we focus on specific types of loans, study every step of the credit process; we study the disbursement process and loan tracking process. At each step we streamline and simplify the process. We have a simplified disbursement process which inexpensively puts a check in our client's hands, often within a day. We developed proprietary credit practices which improve loan performance. We do not advertise. Instead, we depend on word-of-mouth. As we develop these and other cost savings initiatives, we pass the cost savings on to borrowers.

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