Credit Union small loan scheme to be made permanent

Minister for Social Protection, Heather Humphreys, has today announced that an initiative to support low-income individuals and families by giving them access to Credit Union loans is to be made permanent.

‘It Makes Sense’, a Personal Microcredit Scheme initiative, is a Credit Union loan scheme offering small loans at a low interest rate for people in receipt of a social welfare payment.

The Scheme provides affordable credit to people on a low income and aims to reduce dependency on high-cost credit providers.

Most repayments of loans under the scheme are made through An Post’s Household Budgeting facility, which incurs a fee of 25 cent per transaction, borne by Credit Unions.

The Department of Social Protection, recognising the burden these fees place on Credit Unions and wanting to ensure the continued availability of this important loan scheme, has been paying these fees on a pilot basis since January 2020.

Based on the success of this pilot, the Minister is today announcing the permanent establishment of this payment in Statute in the Social Welfare Consolidation Act 2005 (as amended).

Commenting today, Minister Humphreys said:

“I am delighted to announce that the ‘It Makes Sense’, which is rolled out in partnership with our Credit Unions, is to be made permanent.

“This scheme is an important low-interest credit option for people in receipt of social welfare supports, who are in need of small loans and who may otherwise turn to high-cost credit providers.

“The payment by my Department, on a permanent basis, of the transaction fee for repayments through the Household Budgeting Facility will ensure the continued availability of this small but important loan scheme across Ireland.

“I know from my days working in a Credit Union the challenges placed on families and individuals on low income who are in need of small loans.

“I welcome that over half of Credit Unions are offering this scheme, in over 280 locations, and that it is available to non-members as well as members.

“I am delighted that, thanks to my Department’s support, we will see the continued availability of ‘It Makes Sense’ as an important small loan alternative to high-cost credit, and as a stepping stone for people to build up a good credit history and move on to standard loans from their Credit Union”.

Welcoming today’s announcement, David Malone, Chief Executive Officer of the Irish League of Credit Unions, said:

“I welcome the Government’s extension of the payment of transaction charges for Credit Unions participating in the Personal Microcredit initiative, known as the It Makes Sense loan scheme.

“This scheme was established in 2017 and is an alternative to high-cost credit providers.

“For me, this niche but important loan scheme also highlights the essential role Credit unions play in communities around Ireland.

“Credit Unions are in every community in Ireland and provide savings and loans to members on a not for profit basis.”