MANCHESTER, U.K.–A program that offered interest-free loans through credit unions and other lenders in this country to 20,000 people is being expanded to reach as many as 500,000.
The No Interest Loan Scheme (NILS) has been running as a trial in Manchester, with its backers saying it has been a success. It will now roll out across the United Kingdom.
The program is backed by the Treasury but will be run by credit unions and other lenders, according to Yahoo News.
“The aim is to offer emergency loans to people who would normally be turned down, because they can't afford the interest payments,” Yahoo News stated.
One Person’s Example
As an example, the news report cited “Lisa” who said she needed help to pay for her brother's funeral. The 40-year-old from Manchester couldn't find a traditional lender to borrow from.
"My finances were shocking, I was going to court every other week - mainly because of council tax and rent [debt]," she told Yahoo News.
Yahoo News said that as part of the No Interest Loans initial trial, she was given a £300 loan through South Manchester Credit Union.
"I'm saving now. I've learned how to budget, I've learnt how to pay my bills on time, so we've got a roof over our heads and food in our cupboards,” she told Yahoo News. “Going from having nothing to having everything, is all I could ask for.”
The Details
Details of the NILS include:
- It is only available to people who have been turned down for normal borrowing
- Borrowers can borrow between £100 and £2,000. The average amount borrowed is £500
- Terms range from six to 18 months. The average length of time is 12 months
- Customers/members can only have one no interest loan
‘Vulnerable Circumstances’
The No Interest Loan Scheme is being run, in part, by Fair4AllFinance, which was founded by the Treasury and Department for Culture Media and Sport three years ago to "support the financial wellbeing of people in vulnerable circumstances" with a mission to "increase access to fair, affordable and appropriate financial products and services,” Yahoo News said.
The pilot is being funded with £3.8m committed from HM Treasury, £1.2m from JPMorgan Chase and up to £1m of lending capital from each devolved administration, matched in England by Fair4All Finance, the report added.
A full-scale roll-out could reach 500,000 people, according to a feasibility study conducted before the pandemic, the report said.
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