Expansion of community finance initiative
The Community Finance partnership announced today that its low and no interest loan schemes are now available in five
new regions, after receiving additional government funding in the May 2016 budget.
The initiative, which is run by Good Shepherd New Zealand and BNZ, with support from the Ministry of Social Development
and delivered by community partners like the Salvation Army, is now available in Invercargill, Wellington, Whangarei,
Palmerston North and Christchurch in addition to the pilot locations in Auckland.
A pilot was established in 2014 to provide loans to a group of New Zealanders described as ‘financially vulnerable’ -
meaning they don’t meet standard bank criteria and have exhausted their Work and Income options. As a result, many are
forced to take out loans with alternative lenders, many of whom charge high interest rates and fees.
“Community Finance provides access to a fair, safe and affordable line of credit for people living on low incomes, and
we are delighted that the success of the pilot led to the funding that is enabling us to launch our new regions today,”
said Chief Executive of Good Shepherd New Zealand Fleur Howard.
“But we know it’s so much more than a loan. By connecting with community loan workers, people learn life skills like
managing their budget better and become more savvy in their understanding of the dangers of third tier lenders. There
are broader societal benefits in what the loans deliver too – a reliable car for many of our customers is what they need
to hold down a full time job. A computer can help with further education”, she said.
BNZ, which provides the lending, said 280 loans had been approved and estimated that the $700,000 of lending to date has
saved clients more than $380,000 in interest and charges when compared to borrowing the same amount through alternative
lenders.
Chief Executive Anthony Healy said the bank had been a proud partner since inception and had now committed $60 million
in lending over the long term as well as expertise and advice where needed.
“Community Finance addresses a very real need and BNZ is proud to be part of that. But what is most exciting is seeing
what comes next for a client; what the loan enables. I heard about a young man who came to us and said that the only
thing stopping him from getting a job was having a car. We were able to arrange a StepUP loan with Community Finance
which meant he could buy a second hand car. We were delighted when he told us he had secured an apprenticeship the next
day,” he said.
Government evaluation of the Community Finance pilot showed there were other benefits from the financial conversations
that happen as part of the loan process. This includes strengthening people's financial capability and increasing the
wellbeing of families and communities.
Major Pam Waugh, Territorial Social Services Secretary for The Salvation Army said, “Running a tight budget can be hard
enough without the added pressure of predatory lenders on your back. The reduced stress these Community Finance loans
deliver can make such a difference to people's family life.”
The initiative currently partners with The Salvation Army and Aviva in the new locations. New community provider
partners and new locations will be added over the next 6 months.
ENDS