The aim is to prevent people taking out unaffordable loans at extortionate interest rates, running the risk of falling prey to loan sharks.
Some companies offer loans with massive interest rates of up to 16,000% APR– driving desperate people even further into poverty.
But Liverpool Labour is standing up to these loan sharks, and providing help for vulnerable people through the city’s credit untions.
It is estimated that over a three year period the scheme will support over 23,000 people on Merseyside.
And it is estimated that the £1 million investment will lead to around £3 million of money being lent. This is because the Credit Unions will be able to recycle the money once loans start to be repaid.
Labour’s Deputy Mayor, Councillor Paul Brant, said: “This is a pioneering initiative which will help and support the most vulnerable in our communities who are being hit by a triple whammy of rising unemployment, increased costs for food and fuel and cuts in welfare benefits.
“The banks have also toughened up their lending criteria and this means many people and small businesses are unable to get affordable credit.
“All of this means that the temptation to go to a loan shark or pay day lender is higher than ever, and people are increasingly resorting to them out of desperation.
“We want to provide a support route for vulnerable people to help them out of crisis and get their finances back on an even keel.
“I am delighted that seven of the city’s Credit Unions have come together to put together a bid for this funding.
“They are based in the heart of communities and so are well placed to provide funds and advice to those who are most in need.”
“They are going to be making a massive difference to people’s lives and will prevent some on the breadline from going under.”
The seven Credit Unions are:
· Riverside Credit Union
· Enterprise Credit Union
· Knowsley Mutual Credit Union
· Partners Credit Union
· Lodge Lane Credit Union
· Central Liverpool Credit Union
· Norris Green Credit Union