Affordable credit as we emerge from COVID-19.
A new £15 million fund has been announced to support affordable lending services.
It will support Credit Unions and Community Development Financial Institutions (CDFIs) which offer financial help to those who have poor credit and are often turned away from high street banks.
Communities Secretary Aileen Campbell said:
“We know the pandemic has had a financial impact on many people in Scotland and we want to strengthen services that support people with managing their money.
“Credit unions and CDFIs provide ways of saving, lending, and accessing affordable credit. They can be a financial lifeline for people who can’t always access what they need from high street banks, helping them to avoid riskier ways of dealing with debt, like going to pay day loan companies.”
The funding will support work which:
- promotes the availability of affordable credit
- strengthens the balance sheet of affordable credit providers
Organisations are being invited to submit applications by 3 March 2021, and they will be informed of funding decisions during the week commencing 8 March.
Successful applicants will receive funding by 31 March.
Credit unions and CDFIs offer financial products to those who may struggle to get what they need from high street banks. This includes those with no or a poor credit history, low income consumers, young people who are not in employment or education, the elderly and disabled people.
A credit union is a member-owned financial cooperative, operated on a not-for-profit, ethical basis which provides services similar to retail banks, including deposit accounts, provision of credit, and other financial services.
Community Development Financial Institutions (CDFIs) tend to be charities or community interest companies, which typically provide small personal loans of around £500 and offer additional services such as help to manage money, referrals to money or debt advice, support to open bank accounts.
The Scottish Government has also confirmed £14 million for the Community and Third Sector Recovery Programme (CTSRP) in 2021-22, enabling support for Third Sector and community organisations to continue to the end of June 2021. This exceeds projected investment by £4 million and will support charities, community groups, social enterprises and voluntary organisations which are helping people and communities through the shift from lockdown to recovery.