IT’S hard to get people to talk about loan sharks, says Linda Burden. After all, it might be a relative or “friend” who has advanced them some money when they had no one else to turn to.
But it’s those same people who are charging extortionate interest rates and possibly enforcing repayment by blackmail or even threat of violence against them or their family, according to Linda, business development manager for Lincolnshire Credit Union.
So people who are already vulnerable – irregular work, low income, poor credit rating and so unable to go to the usual sources for cash when the washing machine breaks down – end up at the mercy of that “friend” or relation and discover that a £500 loan has turned into an impossible debt because their repayments have not been reducing the amount owed, but simply paying off interest.
Loan sharks are illegal, but the moment one is convicted and taken off the streets another is there to step into his or her shoes... unless the Lincolnshire Credit Union has a presence in that town or village.
Thankfully, the community bank does have a presence locally – in Spalding and in Long Sutton – with volunteers trained to offer a number of services to people who find themselves in financial difficulties.
Linda says: “We are the friendly face of finance, a community bank. We offer affordable loans. People join us from all walks of life, from restricted incomes to those with jobs and regular incomes, but at some point in their life most people want a loan and we offer an alternative to the high cost doorstep lenders who could be charging anything from 272 to 3,000 per cent APR to the people who can least afford it.”
Offering loans irrespective of someone’s credit history is just one of the services offered by Lincolnshire Credit Union, a savings and loans co-operative owned and run by its members. Anyone who lives and works in Lincolnshire can join, but no matter how much money is saved, all members have one share – and after the annual treasurer’s report members decide how much dividend will be paid for each share. All profits are ploughed back into the organisation and the community.
However, the organisation isn’t about a quick fix or one-off loan, but wants to build long-term relationships with people to help them out of the credit trap. That means persuading them to save against a rainy day, and the bank pays into the Financial Services Compensation Scheme so that savings are safe.
The bank offers affordable loans, after first making sure people can afford to take on a small debt.
A partnership with Co-op Electrical and housing associations enables new tenants facing a large financial outlay – rent in advance as well as buying white goods – to use a scheme offering a package to kit out the kitchen at high street-beating prices plus a loan to cover the cost.
Lincolnshire Credit Union also has a scheme in which housing benefits are paid direct to them before being paid to private landlords, who might otherwise be reluctant to allow tenants on benefits from renting their property.
Finally, the bank offers budgeting advice to people with debts lower than £5,000, working closely with the CAB (Citizens’ Advice Bureau).
Linda explains: “Once we have someone’s finances sorted out we offer long-term support to get them back on their feet, offering them a loan when nobody else would. We don’t want them to get back into that spiral that got them into debt in the first place. As part of that we offer a bill-paying service. If someone is struggling to prioritise their bills we will help them to do that.”
Although there are currently just two centres, the plan is to eventually have a presence in every market town across the county. In the meantime, sessions are held at the Long Sutton Market House every Friday (10am to 12 noon) and at St Paul’s Church each Saturday (10am to 12 noon).