A government-backed scheme that provides interest-free loans to the financially vulnerable will be expanded to 20,000 people.
The interest-free loan scheme (Nils), which is backed by the Treasury but run by credit unions and other credit institutions, has passed a successful test in Manchester and will be introduced in other parts of the UK in September.
It aims to offer emergency loans to those who would otherwise be turned down because they cannot afford interest payments.
“We fund items from the most important things for the household and school uniforms to laptops for access to education and training, as well as tools and equipment to help people get back to work,” Nils said on his website.
The pilot scheme will be extended from existing locations in Herefordshire, Shropshire and Worcester from September to other parts of the country for a period of two years, after which a decision will be made on whether to expand further.
Clients can only have one loan with the program, which they can receive for between six and 18 months, although the average duration is 12 months. Borrowers have access between £ 100 and £ 2,000, with an average loan amount of £ 500.
The pilot project is funded with £ 3.8 million provided by the Treasury, £ 1.2 million by JP Morgan Chase and up to £ 1 million in borrowed capital from each of the decentralized administrations compared to Fair4All Finance in England.
Fair4All Finance, which partially manages the scheme, was set up by the Ministry of Finance and the Ministry of Digital Technology, Culture, Media and Sport three years ago to “support the financial well-being of vulnerable people”.
Sign up for the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk
Treasury Secretary John Glenn said last month that he hoped a full-scale program could eventually be launched.
He told the Association of British Credit Unions that Nils “is a fundamental, noteworthy new initiative to provide a portal product for people who are currently out of the credit capacity of some credit unions”.
He said: “The challenge now will be to bring this pilot in to prove the concept of a bigger pilot so that we can confirm it now.”
Add Comment