Micro-lending scheme launched
The Brotherhood of St Laurence is responding to the rapid growth of pay-day lenders by launching a pilot scheme to provide low-value loans to needy customers otherwise not eligible for bank credit. It will not be a charitable endeavour, however, it has to be self-sustainable, says Father Nick Francis, a former stockbroker and now executive director of the Brotherhood.
Under the plan funds will be advanced to customers for household items such as fridges and washing machines. If the customers adhere to the repayment schedules they can borrow more to upgrade the assets or for other items.
Father Francis says that the Brotherhood is keen to partner with a bank to obtain financial expertise in back office operations and credit management. The aim is to eventually convert his customers into traditional bank customers, he says. The scheme has attracted Westpac's attention, as it's already involved in micro lending with the Smith Family and the Benevolent Society. A Westpac spokesman confirmed that the bank is “in dialogue” but not yet actively involved in terms of committing capital.