Industry Lending Website providentloan.com Type of business Nonprofit organization | Products Loans Founded 1894 | |
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Headquarters New York City, New York, United States Key people J. P. Morgan, Jacob Schiff Profiles | ||
The Provident Loan Society of NY is an American not-for-profit organization headquartered in the Manhattan borough of New York City, New York.
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It was created in the 19th century by a group of influential New Yorkers as an alternative to loan sharks of the day. Founders include Robert W. De Forest, James Speyer, Otto T Bannard, J.P. Morgan, Jacob H. Schiff, August Belmont, Jr. and Cornelius Vanderbilt II.
Today, Provident Loan Society of NY provides short-term cash loans to individuals secured by gold and diamond jewelry, fine watches and silverware and is America's last remaining not-for-profit loan society created during the economic crisis of the late 19th and early 20th centuries.
History
The Provident Loan Society of NY was created during the financial panic of 1893. In an uncertain economic environment amid foreclosures and bank failures, people sought cash from unregulated loan sharks and pawnbrokers. As a result, a group of powerful New York bankers and financiers pooled money together, pledging $35,000 each to establish a not-for-profit organization to provide short-term loans at a lower rate than the loan sharks. The organization was modeled on European financial institutions known as mont de piété or mount of piety. The contributors included Solomon Loeb, Alfred B. Mason, J.P. Morgan, Gustav H. Schwab, Jacob H. Schiff, James Speyer, Seth Low and Cornelius Vanderbilt II, among others.
The New York State Legislature passed a special act in 1894 incorporating The Provident Loan Society of New York. At its peak in 1962, the Society had seventeen locations around New York. As of 2016, there were five remaining locations.
Present
Today, Provident Loan states that it serves approximately 100,000 people annually. The maximum amount that the institution will loan is $100,000 for a term of six months at an annual interest rate of 26%. New York State laws governing pawnbrokers allow pawn shops to charge up to 48% annually. Provident Loan will not buy merchandise, however, only lend against its value.