From September 2022 the new scheme will be rolled out after it had a successful trial in Manchester, the ‘No Interest Loan Scheme’ (NILS) is backed by the Treasury but the scheme will be run by credit unions and other lenders. On the NILS website its states: “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. The aim is to offer emergency loans to people who would normally get turned down by other lenders or wouldn’t be able to afford the interest payments. The scheme was initially rolled out in Manchester but has now expanded in a larger pilot phase to various locations across the UK which will last for up to four years, after the four years a decision will be made on whether to roll it out further.
What does the No Interest Loan Scheme Offer?
- It is only available to people who have been turned down for normal borrowing.
- They can borrow between £100 and £2,000. The average amount borrowed is £500.
- They can borrow the money for six to 18 months. The average length of time is 12 months.
- Customers can only have one no interest loan.
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 developed administration, matched in England by Fair4All Finance. Fair4All was founded by the Treasury and Department for Culture Media and Sport and was set up three years ago to help vulnerable people. If the new phase is successful a full- scale roll-out could reach around 500,000 people according to a study which took place before the Global Pandemic.
Apart from the emergency finance the benefit of the scheme is that it introduces people to the credit union and other lenders, which can then offer further support in the form of advice around budgeting and debt management. Credit unions are financial co-operatives owned by their members. They offer lots of the same services as banks. The credit unions are fully regulated and because they are owned by members any profits stay within the union for the benefit of members rather than going to shareholders.
Sheenagh Yound, Chief Executive of South Manchester Credit Union, where the new trial started says: “The feedback so far has been excellent.”
“Credit Unions are working away on street level but somehow we’re a bit of a best-kept secret, so we need to to rocket fuel it and scale it up.”
“This trial shows that HM Treasury want to invest in us, external investors want to invest…and extend that gateway which supports the work we’re doing and amplify it.”
You can apply for the scheme through: nils.org.uk