One step ahead ineasing credit fears
AS the Government announced a relaxation of credit rules, one innovative Teesside business is providing interest-free loans for cash-strapped employees.
Specialist stone workers F Jones Cleveland, which is also offering advice on debt restructuring and financial management, believes the move will reduce workplace stress and boost productivity.
The loan, which could be used as a deposit for a home or to reduce credit card bills, is paid back over a time period agreed by the company and employee.
Director Ian Jones said there had been no instances of staff failing to meet their repayments.
He said: “Some people get behind on their loans and start worrying, which could affect their work. We’re not the (Joseph) Rowntree Foundation but our aim is to develop an effective workforce. We help them to understand their responsibilities in paying back the loan.”
Believed to be the first scheme of its kind in Teesside, it is providing welcome relief at a time when consumers are finding it increasingly difficult to borrow money from traditional High Street lenders.
Reduced availability of credit has forced the Government to unveil a new initiative to help people who are having trouble repaying debts or obtaining loans from other lenders.
The Treasury is planning to remove restrictions on who credit unions can lend to and allow them to form alliances with other unions, employers and housing associations.
Although any area or organisation can form a credit union, they currently have to operate within their own communities - known as the Common Bond. Ministers believe that relaxing the lending criteria will allow the sector to grow and reduce the likelihood of people falling prey to loan sharks.
Elaine Gilmour, credit union development and support officer who works with Middlesbrough’s nine credit unions on behalf of the social enterprise organisation Community Ventures (Middlesbrough) Ltd, said the Government must tackle the fundamental issues of how lenders are financed if it wants them to extend services.
She said unions “fell through the cracks” when applying for funding. “They are not a registered charity, but they are a not-for-profit organisation, and they often fall between the cracks of all the criteria.”
She said many had already failed in their bid to be included in the Government’s financial inclusion initiative for that reason.
See next week’s Tuesday supplement for a full report on Middlesbrough’s credit unions.
