London Daily

Focus on the big picture.
Thursday, Oct 30, 2025

Interest-free loan scheme aims to reach 20,000 people

Interest-free loan scheme aims to reach 20,000 people

A scheme offering interest-free loans to the financially vulnerable is being expanded to reach up to 20,000 people.

After a successful trial in Manchester the No Interest Loan Scheme (NILS) will be rolled out across the UK from September.

It's backed by the Treasury but will be run by credit unions and other lenders.

The aim is to offer emergency loans to people who would normally be turned down, because they can't afford the interest payments.

That's the position Lisa was in when 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 said.

But as part of the No Interest Loans initial trial scheme, she was given a £300 loan. And her involvement with South Manchester Credit Union, who ran the trial, led her to change her approach to managing her finances.

"I'm saving now, I've learnt 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. Going from having nothing to having everything, is all I could ask for," she said.

The initial trial Lisa benefited from began earlier this year and is still ongoing.

But it is now being expanded in a larger pilot phase to various locations across the UK which will last for up to two years.

After that, 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 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".

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 nationwide pilot phase is designed to offer small scale help to 20,000 people, who otherwise would have struggled to borrow.

If that phase is a success, a full-scale roll-out could reach 500,000 people, according to a feasibility study conducted before the pandemic. Thanks to the cost of living crisis, even more people could now be eligible, one expert suggests.

Apart from the emergency finance, one over-arching benefit of the scheme is that it introduces people to the credit union and other lenders providing the loans, 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, including ways to save, secure deposits and loans. They're fully regulated and because they're owned by members any profits stay within the union for the benefit of members - rather than going to shareholders.

Encouraged by the credit union, Lisa is now saving for the first time and has put away £5 every week since January leaving her with £105.

"Even seeing it brings a smile to my face. For some people that's nothing, but to me it could be a million pounds," she said "That's how it feels because I've never had it before."

Sheenagh Young, chief executive of South Manchester Credit Union, where the initial proof-of-concept trial took place, 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 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."

Sheenagh Young, chief executive of the south Manchester Credit Union, says the new no interest loan scheme needs to be scaled up using "rocket fuel"


Earlier this year Economic Secretary to the Treasury John Glen talked about the £3.8m of government funding for the pilot.

The scheme was designed for consumers "in vulnerable circumstances who would benefit most from affordable credit to meet unexpected costs", he said.

"This 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," he said.

Newsletter

Related Articles

0:00
0:00
Close
UK and Vietnam Sign Landmark Migration Deal to Fast-Track Returns of Irregular Arrivals
UK Drug-Pricing Overhaul Essential for Life-Sciences Ambition, Says GSK Chief
Princesses Beatrice and Eugenie Temporarily Leave the UK Amid Their Parents’ Royal Fallout
UK Weighs Early End to Oil and Gas Windfall Tax as Reeves Seeks Investment Commitments
UK Retail Inflation Slows as Shop Prices Fall for First Time Since Spring
Next Raises Full-Year Profit Guidance After Strong Third-Quarter Performance
Reform UK’s Lee Anderson Admits to 'Gaming' Benefits System While Advocating Crackdown
United States and South Korea Conclude Major Trade Accord Worth $350 Billion
Hurricane Melissa Strikes Cuba After Devastating Jamaica With Record Winds
Vice President Vance to Headline Turning Point USA Campus Event at Ole Miss
U.S. Targets Maritime Narco-Routes While Border Pressure to Mexico Remains Limited
Bill Gates at 70: “I Have a Real Fear of Artificial Intelligence – and Also Regret”
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Saudi Arabia Unveils Vision for First-Ever "Sky Stadium" Suspended Over Desert Floor
Amazon Announces 14 000 Corporate Job Cuts as AI Investment Accelerates
UK Shop Prices Fall for First Time Since March, Food Leads the Decline
London Stock Exchange Group ADR (LNSTY) Earns Zacks Rank #1 Upgrade on Rising Earnings Outlook
Soap legend Tony Adams, long-time star of Crossroads, dies at 84
Rachel Reeves Signals Tax Increases Ahead of November Budget Amid £20-50 Billion Fiscal Gap
NatWest Past Gains of 314% Spotlight Opportunity — But Some Key Risks Remain
UK Launches ‘Golden Age’ of Nuclear with £38 Billion Sizewell C Approval
UK Announces £1.08 Billion Budget for Offshore Wind Auction to Boost 2030 Capacity
UK Seeks Steel Alliance with EU and US to Counter China’s Over-Capacity
UK Struggles to Balance China as Both Strategic Threat and Valued Trading Partner
Argentina’s Markets Surge as Milei’s Party Secures Major Win
British Journalist Sami Hamdi Detained by U.S. Authorities After Visa Revocation Amid Israel-Gaza Commentary
King Charles Unveils UK’s First LGBT+ Armed Forces Memorial at National Memorial Arboretum
At ninety-two and re-elected: Paul Biya secures eighth term in Cameroon amid unrest
Racist Incidents Against UK Nurses Surge by 55%
UK Chancellor Rachel Reeves Cites Shared Concerns With Trump Administration as Foundation for Early US-UK Trade Deal
Essentra plc: A Closer Look at a UK ‘Penny Stock’ Opportunity Amid Market Weakness
U.S. and China Near Deal to Avert Rare-Earth Export Controls Ahead of Trump-Xi Summit
Justin time: Justin Herbert Shields Madison Beer with Impressive Reflex at Lakers Game
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
Giuffre’s Memoir Alleges Maxwell Claimed Sexual Act with Clooney
House Republicans Move to Strip NYC Mayoral Front-Runner Zohran Mamdani of U.S. Citizenship
Record-High Spoiled Ballots Signal Voter Discontent in Ireland’s 2025 Presidential Election
Philippines’ Taal Volcano Erupts Overnight with 2.4 km Ash Plume
Albania’s Virtual AI 'Minister' Diella Set to 'Birth' Eighty-Three Digital Assistants for MPs
Tesla Unveils Vision for Optimus V3 as ‘Biggest Product of All Time’, Including Surgical Capabilities
Francis Ford Coppola Auctions Luxury Watches After Self-Financed Film Flop
Convicted Sex Offender Mistakenly Freed by UK Prison Service Arrested in London
United States and China Begin Constructive Trade Negotiations Ahead of Trump–Xi Summit
U.S. Treasury Sanctions Colombia’s President Gustavo Petro over Drug-Trafficking Allegations
Miss USA Crowns Nebraska’s Audrey Eckert Amid Leadership Overhaul
‘I Am Not Done’: Kamala Harris Signals Possible 2028 White House Run
NBA Faces Integrity Crisis After Mass Arrests in Gambling Scandal
Swift Heist at the Louvre Sees Eight French Crown Jewels Stolen in Under Seven Minutes
U.S. Halts Trade Talks with Canada After Ontario Ad Using Reagan Voice Triggers Diplomatic Fallout
Microsoft AI CEO: ‘We’re making an AI that you can trust your kids to use’ — but can Microsoft rebuild its own trust before fixing the industry’s?
×