A Government-supported scheme which provides interest-free loans to the financially vulnerable will be expanded to reach up to 20,000 people (Dominic Lipinski/PA)
(Picture: PA Wire)An expanded interest-free loan to the financially vulnerable will be available to help up to 20,000 more people.
The Treasury-backed No Interest Loan Scheme, administered by credit unions and lending institutions, was successfully trialled in Manchester and will be rolled out across more locations in the UK in September.
Its objective is to provide emergency loans to people who would otherwise be turned down due to their inability to pay the interest.
It’s hoped the programme will provide emergency loans to people who would otherwise be turned down due to their inability to pay off the interest.
It is also hoped that the programme will provide an alternative to the UK’s three-million high-cost credit users, preventing people from going into debt, or, turning to loan sharks.
How does the No Interest Loan Scheme work?
Starting in September, the pilot scheme will be extended from its current locations of Herefordshire, Shropshire and Worcestershire to other regions of the UK for a two-year period, with another decision on whether it should be extended further taken after that.
Customers can only take out one loan through the programme, which can last from six to 18 months, although the average length of time is one year.
Borrowers are able to access from £100 to £2,000, with the average loan amount £500.
On its website, Nils says: “We fund items from household essentials and school uniforms through to laptop computers to access education and training, and tools and equipment to help people back into employment.”
How is it funded?
The scheme is funded with £3.8 million from the Treasury, £1.2 million from JP Morgan Chase, and £1 million in lending capital from each of the devolved administrations.
Fair4All Finance, which partly runs the scheme, was founded by the Treasury and the Department for Culture Media and Sport three years ago to “support the financial wellbeing of people in vulnerable circumstances”.
Economic secretary to the Treasury John Glen last month expressed hope that a full-scale programme might eventually be rolled out.
He told the Association of British Credit Unions that Nils “is a fundamental, worthwhile, new initiative, to provide a gateway product for people who at the moment are beyond the lending capacity of some credit unions”.
“The challenge now will be to take that proof-of-concept pilot to a bigger pilot so that we can now validate it.”
Why is the scheme needed?
The No Interest Loan Scheme (Nils), which is backed by the Treasury but run by credit unions and other lending organisations, has been successfully trialled in Manchester and from September will be rolled out in other parts of the UK.
It aims to offer emergency loans to those who would otherwise be turned down due to not being able to afford interest payments.
“We fund items from household essentials and school uniforms through to laptop computers to access education and training, and tools and equipment to help people back into employment,” Nils says on its website.
How can I use the scheme?
Customers are only allowed to have one loan with the programme, which they can have for between six and 18 months though the average length of time is 12 months.
Borrowers can access between £100 and £2,000, with the average amount borrowed £500.
