Town Using Cheap Loans to Lure Shoppers

Bankers and merchants hoping to boost holiday business in this small town are offering low-interest loans to people who agree to do their Christmas shopping here.

Under the program, qualified applicants can borrow $100 to $1,000, must spend the money by Dec. 24 and must pay it back by Nov. 1, 1988, at 6% interest. The loan is handed out in Gregory Christmas Dollars, play money that will not be accepted elsewhere.

A total of $60,000 is available, with $20,000 each put up by First Fidelity Bank, Norwest Bank and the Consumers Federal Credit Union, said Joe Duling, vice president and branch manager of First Fidelity.

Lower Interest Rate

The normal interest rate on consumer loans is about 12.5% at his bank, he said. The financial institutions and the retailers will split the difference between the normal rates and the special 6% rate.

Francie Johnson, president of the Commercial Club, said most merchants in the south-central South Dakota town of 1,500 are participating in the program.

A similar loan program is being offered by Commercial Bank in the town of Mitchell, S.D. Shoppers who do business there can borrow $1,000 to $2,000 at 7.5% interest.

“The proceeds of the loans are to be used at Mitchell merchants only,” said Sheilah Stoneback, a loan officer for Commercial Bank.

Duling had said Friday that the week-old promotion in Gregory “is not going over like gang busters.” However, by Wednesday it appeared to be catching on.

“It is doing very well now,” he said. “People out here in the small towns kind of wait and do their shopping a little later than normal.”