Tuesday 25 October 2016

Up to 30 credit unions in line for €1k cheap lending scheme


Minister Kevin Humphreys
Minister Kevin Humphreys

THE Government is hoping to role out its new microloan scheme in up to 30 credit unions from September as talks continue with the Central Bank over a nationwide rollout.

Some six credit unions have already expressed their interest in being part of the scheme, which will see loans of up to €1,000 being provided to thousands of families per year.

Interest rates of up to 12pc will be applied on the loans - compared to rates of up to 188pc applied by some moneylenders.

The plan, revealed by the Herald, has been warmly welcomed by charities and other interest groups.


The Government is hopeful to sign up 30 credit unions ahead of the pilot scheme, which will have a specific focus on working-class urban areas.

This figure represents about 10pc of credit unions.

Labour Minister Kevin Humphreys, who is leading the initiative, said it has been needed in communities for decades.

"It's vitally important, particularly given the huge numbers of people that turn to moneylenders," the Dublin Bay South TD told the Herald.

The scheme will have a significant involvement from the finanacial advice service MABS and St Vincent de Paul.

The Household Budgeting Scheme would ensure that those who take out a loan have the necessary support to ensure they can meet repayments.

It's understood that this scheme may be expanded through a legislative change once the loans are introduced.

Oversight of the scheme will be provided by the Social Finance Foundation, which collaborates with the banks and the Government to promote responsible lending.


The Social Finance Foundation was set up with €72m in funding from the banks with the aim of providing lending to financially excluded groups.

Chief executive of the foundation, Brendan Whelan, said microloans would challenge the operations of moneylenders.

"The customers of the licensed moneylenders are those who can least afford to pay interest rates of over 150pc," he said.

"The scheme will be designed to meet the needs of those who most need it, in terms of simplicity, convenience, speed and affordability."

The Irish League of Credit Unions (ILCU) said micro-loans will come as a boost to the credit union sector.

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