Community bank assisting residents with no-interest loans

Adur & Worthing Councils are to work with a community bank to offer no-interest loans to residents who may struggle to access credit.

A cost-of-living crisis was declared by the Councils last summer, with many households in the area struggling to afford to feed themselves and their families.

For those with a low credit score or low income, borrowing from a high street bank or mainstream lender may not be possible.

Instead, they may feel forced to turn to credit cards or seek a loan from a payday lender with a high interest rate, which could cause them to spiral into further debt.

The Councils are working with Worthing-based Boom Community Bank, a not-for-profit organisation whose members pool their savings, to offer no-interest loans to some of the most vulnerable residents in the area.

The scheme is being funded by £100,000 from the UK Shared Prosperity Fund, which Adur & Worthing Councils successfully bid for.

From April, residents will be eligible to apply to Boom for a no-interest loan if they are turned down for an interest-bearing loan due to affordability reasons, if where removing the interest would have made the loan affordable. Typical loans are for between £300 and £1500 with residents having up to three years to repay them.

Repayment schedules are tailored to reflect the borrower’s financial circumstances and their capacity to pay. Funds repaid by borrowers are then used to service new loans – enabling more people to be assisted.

Details of how to apply for a loan will be published in the coming weeks on the Councils’ website.

Community bank scheme to help pay for essentials

The scheme follows on from a national government trial of no-interest loans, which helped people pay for housing deposits, essential furniture, white goods and upfront nursery fees to enable people to get back into work.

Cllr Angus Dunn, Adur’s Cabinet Member for Finance and Resources, said: “Financially excluded or vulnerable households have little access to affordable loan products, which can lead them to take out loans with sky-high interest rates. This scheme will provide a safety net for people to pay for essential items or get access to education and employment without spiralling into debt.”

Cllr Carl Walker, Worthing’s Deputy Leader, said: “The cost of living crisis has left many people unable to save for the future or cover unexpected costs. Local community banking means that residents in financial difficulty can avoid payday lenders and help savings stay in the local economy – something that benefits not only residents but also local shops and businesses.”

Any residents looking for more help or advice on the cost of living can visit www.adur-worthing.gov.uk/cost-of-living-support