Residents on low incomes who may be tempted by payday loan companies can apply for safe and affordable loans thanks to new Derbyshire County Council funding.
The council is to make safe instant access loans available by providing £300,000 additional funding to local Credit Unions.
Credit Unions are playing an increasingly important role in supporting people struggling with debt and low incomes by providing access to affordable credit and by encouraging saving.
Funding for the project – one of the schemes highlighted in the council’s pledge to tackle poverty – was approved by Cabinet on July 30.
County council Cabinet Member for Health and Communities Councillor Dave Allen said: “When people are struggling to make ends meet and put food on the table for their family any offer of money to get them through the week can be tempting.
“But these quick financial fixes come at an extremely high cost and it is sadly financially vulnerable people who can afford it the least who are preyed on the most.
“We want to help people struggling with debt and those on low incomes to get back on their feet and this system avoids the need for them to use extortionate doorstep lenders, illegal money lenders or payday loan companies offering short-term high-cost credit.
“Derbyshire’s Credit Unions do an invaluable job and we’re committed to supporting them. We believe that providing additional funding to support their work will have a positive knock-on effect in local communities.”
The system has already been successfully piloted in Chesterfield and North East Derbyshire with Credit Unions offering people access to instant loans of up to £500 with repayments secured by direct deduction from benefit payments to ensure a low default rate.