The latest deal from the Social Impact Accelerator (SIA) Loan Scheme will help low income households in Lancashire and South Wales access affordable credit.
The £750,000 SIA loan, which forms part of a £3.25milion funding package, will enable Blackburn based community lender, Moneyline, to expand its services and increase its annual lending of £9million in 2015 to £16million by 2018. This is expected to boost the number of loans made to around 36,000 in the same period, promoting financial inclusion across the area’s most disadvantaged communities and households.
The ‘poverty premium’, currently thought to be around £1000 per annum, is identified as the additional cost that low income individuals find themselves paying due to higher pricing for basic goods and services. The high cost of credit for these individuals is considered to be a major factor, with APRs sometimes as high as 1500%. Moneyline estimates that during 2014 it saved its customers more than £2.5million in interest by providing an alternative to payday and doorstep lenders.
The social enterprise maps every loan to ensure it is reaching the most disadvantaged communities, with over 70% of customers falling into the most deprived 20% of households. Its approach focuses on helping its customers through times when they are hit by unexpected or seasonal expenses, also working with them to encourage better management of personal finances.
Moneyline CEO, Diane Burridge, says: “Low income households can be hit hard by seasonal costs such as new school uniform, or Christmas. Because we deal with all our customers on a face to face basis, we are able to build a relationship and understand their financial circumstances better. With our round-it-up plan, many of our customers choose to pay an additional amount on top of the loan repayment, which creates a savings buffer for times of additional expense.”
The funds will enable Moneyline to open new branches, extending its reach to help more people avoid financial exclusion.
Mark Bickford, Senior Fund Manager at The FSE Group, which manages the Social Impact Accelerator Loan Scheme comments: “Moneyline is one of the major players in the community lending sector. The management team has made the structural changes required to move from a grant and subsidy reliant body, into a fair but financially sustainable organisation offering affordable lending to those most in need. We hope this success will encourage social and mainstream capital into other ethical lenders elsewhere in the UK.”
For more information or to apply to the FSE Social Impact Accelerator, please contact Mark Bickford, Senior Fund Manager, firstname.lastname@example.org or visit the FSE website: www.thefsegroup.com/social-impact-funding/sia