Community Finance providers help a wide range of customers to save and borrow and are an alternative to both high-street banks and higher-cost or illegal lenders.
They are experts in lending responsibly and sustainably to people in financially vulnerable circumstances and are a vital sector that is helping a growing number of people manage unexpected expenses and smooth irregular income.
Consumer awareness of credit unions and community lenders (also know as Community Development Finance Institutions or CDFIs) is very low. Fair4All Finance is working with organisations representing the Community Finance sector and with individual providers to help more people find fair finance via media and personal finance influencer outreach and by working with like-minded organisations to share information about Community Finance.
Organisations looking to help the public and those they support to access fair finance; and those wishing to find out more about Community Finance awareness raising activity should contact our team on hello@fair4allfinance.org.uk
Building financial resilience
Affordable credit won’t be right for everyone but when provided responsibly it builds financial resilience. The vast majority of struggling households do not apply for a loan unless it’s necessary. Fair loans can give people the dignity of providing for themselves and their families, without resorting to higher cost credit or illegal options like loan sharks. They also help make people better able to keep on top of council tax and utility bills. Examples might be a parent buying uniform and IT for their kids to thrive at school or a person with a disability replacing a broken freezer so they can stay independent.
As responsible, regulated lenders, Community Finance providers will only lend to people who are able to afford repayments. All Credit Unions and most Responsible Finance firms (Community Development Financial Institutions/CDFIs) are non-profit and they all put people’s financial wellbeing first. They will encourage customers to save alongside borrowing where possible and they provide loans with significantly lower repayments than purely commercial and illegal lenders – often helping people who can’t access the best deals on the market due to poor credit scores.
Finding Credit Unions and Community Lenders
We are asking the media, influencers and organisations that support the growing number of people in financially vulnerable circumstances to help people avoid higher-cost and illegal lenders by signposting them to Community Finance providers for essential, fair loans.
Find Your Credit Union helps people find a credit union near them or one that works with particular employers. Finding Finance is the place to go to find simple, fair, small affordable loan providers. You can view these pages below:
Because of their long history supporting customers in vulnerable circumstances, Community Finance providers are natural partners to frontline organisations.
Community Finance providers aren’t able to help everyone. Where people don’t qualify, they will be directed to other forms of support including budgeting tools and benefits calculators, to help maximise their income, and debt advice partners to help manage problem debt.
Why is is important now?
Research conducted earlier this year by Fair4All Finance and Trajectory Partnership showed that at least 17.5 million people were currently in financially vulnerable circumstances.
As we approach the winter months millions of people across the UK are finding it tougher than ever to pay their bills due to the current cost of living crisis. Rising energy, food, fuel and housing costs are putting a strain on our finances, and many households are struggling to make ends meet. Being able to find the right kind of financial support is going to be critical for so many households.
Being unable to meet unexpected costs or to smooth out irregular income has a negative impact on financial wellbeing and health. Living without essential items is rarely a good response yet not everyone in need is eligible for charity or grant support.
There has been a recent contraction in the regulated, commercial high-cost credit market. Whilst the closure of several high-cost credit firms is welcome, the unintended short-term consequence is that people with poor credit scores have fewer options and are more likely to resort to illegal lenders. That is why signposting to community finance providers is more important than ever.