London Daily

Focus on the big picture.
Thursday, Jul 03, 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
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
OpenAI Secures Multimillion-Dollar AI Contracts with Pentagon, India, and Grab
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Elon Musk Critiques Senate Budget Proposal Over Job Losses and Strategic Risks
Los Angeles Riots ended with Federal Investigations into Funding
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Education Secretary Announces Overhaul of Complaints System Amid Rising Parental Grievances
Massive Anti-Government Protests Erupt in Belgrade
Trump Ends Trade Talks with Canada Over Digital Services Tax
UK Government Softens Welfare Reform Plans Amid Labour Party Rebellion
Labour Faces Rebellion Over Disability Benefit Reforms Ahead of Key Vote
Jeff Bezos and Lauren Sánchez Host Lavish Wedding in Venice Amid Protests
Trump Asserts Readiness for Further Strikes on Iran Amid Nuclear Tensions
North Korea to Open New Beach Resort to Boost Tourism Economy
UK Labour Party Faces Internal Tensions Over Welfare Reforms
Andrew Cuomo Hints at Potential November Comeback Amid Democratic Primary Results
Curtis Sliwa Champions His Vision for New York City Amid Rising Crime Concerns
Federal Reserve Proposes Changes to Capital Rule Affecting Major Banks
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Trump Escalates Criticism of Media Over Iran Strike Coverage
Trump Announces Upcoming US-Iran Meeting Amid Controversial Airstrikes
Trump Moves to Reshape Middle East Following Israel-Iran Conflict
Big Four Accounting Firms Fined in Exam Cheating Scandal
NATO Members Agree to 5% Defense Spending Target by 2035
Australia's Star Casino Secures $195 Million Rescue Package Amid Challenges
UK to Enhance Nuclear Capabilities with Acquisition of F-35A Fighter Jets
×