East Sussex Credit Union has been granted a loan of £150,000 by East Sussex County Council, to enable the Credit Union to help more residents in the County to deal with financial issues and build up savings for the future.
East Sussex Credit Union (ESCU) is a local savings and loans co-operative. ESCU has a current membership of over 6,300, savings of over £2.8 million and have lent out more than £2 million. 35% of ESCU’s lending in the last year is to people who are most in need. When compared against interest rates offered by doorstep lenders and payday loans, it is estimated that ESCU has saved East Sussex residents £330,000 in interest in the past year.
Cllr Keith Glazier, East Sussex County Council leader, said:
The roll-out of Universal Credit in the county may impact on residents who have to wait to switch over to the new system or who are currently not able to obtain a bank account.
East Sussex Credit Union does a fantastic job in helping people on low incomes to manage their finances and avoid falling into the trap of high-interest loans, so they have more money to spend in the local economy or to save for the future.
This loan represents an excellent investment in helping the Credit Union to do even more to support some of the county’s most financially vulnerable residents and contributes towards our priority of helping people to help themselves.
The subordinated loan will allow the ESCU to expand its operations while retaining the investment as an asset on the Council’s balance sheet. It enables reserves that would usually be invested and earning minimal interest, to be invested ethically in the Credit Union whilst simultaneously contributing to ESCC’s financial inclusion agenda. Subordinated loans are a way of providing capital to a credit union. The loan debt is subordinated to the interest of the members, that is if a credit union becomes insolvent, repayment of the debt would be made only after the repayment of members’ shares.
Research by Salford University on behalf of Leeds City Council found that for every £1 the Council invested in credit unions, there was a £9 benefit in retained income for the local economy.
Ann Hickey, CEO of East Sussex Credit Union says:
At a time when households having minimal savings, increasing debt and squeezed incomes as well as the roll-out of Universal Credit, the services of a credit union are even more vital as we offer safe savings, affordable loans and help on managing money. People, who are managing to save, borrow sensibly and manage their loan repayments are less likely to need advice and support from the Council and other public services to deal with their financial and other issues.
ESCU offers a long term solution to help people get into a savings habit – even whilst borrowing, with our Saver Loans – to build their credit history with affordable loans, and gain access to other services such as prepaid VISA cards, with a basic bank account that don’t require a credit check.
To find-out about becoming a member see their website: www.eastsussexcu.org.uk.