Partnership with the Credit Union

Widening Access to Affordable Credit

Southway’s Affordable Loan Scheme

Using social lending to support digital inclusion

Why we developed the loan scheme

Greater need for affordable credit due to: •Economic climate, uncertain job market and welfare reform changes (No reserve funds available for a home emergency) •Withdrawal of Social Fund – replaced by City Council Welfare Provision Fund (£30)•Increase in numbers turning to high interest /Payday lenders (More problem debt)•Credit Union loans often lend too little or already have one and not repaid enough to get another

The Scheme

The Partnership• Southway – Fund the scheme £50,000 and

refer eligible tenants ( No eviction authorised, no ASB injunction, no overdue gas checks)

• 1 loan per household.

• Credit Union – administer /process loans – paid £30 fee per loan.

Products

• ‘Southway Solutions’ - Intended for home emergencies ( car repair, cooker breakdown).

• £100 - £300• Repayment periods 3 mths – 36 mths • 42.6% APR (can migrate to CU loan at 26.8% if

maintain regular repayments)• No credit check• Same day payment if all paperwork in order

and present at Credit Union by 2pm.

‘Right Track’

• Buys tenants out of other high interest loans. • £300 - £1000 (same repayment periods)• Credit checked• For those being supported by the Advice

Services Team - Part of a money management plan to put finances back on track.

• If owe too much to be helped - referred to debt advice

Using affordable credit and Credit Union partnership to support

digital inclusion

The Digital Divide a third of households in the UK don't have the internet

• 1 in 4 adults in the UK have never used the internet

49%of people without access are in the lowest socio-economic groups (DE) 70% of people who live in social housing aren't online

[Martha Lane Fox, Digital Inclusion Champion]

38%people not online are also unemployed

£560The amount digitally excluded households are missing out on per year from not shopping and paying bills online

80%of government interactions with the public take place with the bottom 25% of society,

15% of people living in deprived areas have used a government online service or website in the last year, compared to 55% nationally

Need for Digital inclusion projects to respond to Welfare Reform changes

Approx two thirds of working age Southway tenants are claiming benefits so need to:

• Prepare for DWP moving to a ‘digital by design’ service (On-line claiming, claim updates).

• Use Universal Job Match to comply with ‘claimant commitment’ and avoid sanctions

Tenants will therefore need to:• Be computer literate• Have access to computer equipment• Have access to the internet

The Internet is increasingly important to access advice, information and support services

‘Internet Savvy’

• Access (to equipment /internet)• Skills and confidence to use equipment• Motivation – the internet creates interest and

has financial / social gains

All the above been referred to as:

‘Effective Access’

Course Features

• Group of 10 – 14 learners• 12 x 3 hr sessions (1 day a week)• Optional extra session for exam• Southway pay 50% of cost for refurbished laptop

for completing the course (£101)• Learners save £101with the Credit Union each

week, then qualify for a loan if any left to pay.• Use same laptop for the course (stored between

sessions until paid for).

Course Content

• Banking on line• Paying bills /switching suppliers/comparison• Buying /selling on-line• Emailing / Skype• Benefit claiming – form filling• Job searching• Creating/ uploading CVs• Useful sites for info /advice /saving money (CAB,

TurntoUs, Gumtree, Freecycle etc)

Additional Gains

• Become more engaged with the Credit Union• Social gains – form friendships /maintain

contact with others in group, friends and relatives abroad – Email /Skype

• More confident –want to do more courses /volunteer

• Helped with other issues – debts, benefits, grants, finding work, getting bank accounts, referral to the loan scheme.