Microfinance for Low-income Earners

Redfern Legal Centre regularly sees clients who are compelled to use short-term high interest loans with payday lenders. Factors such as poor credit history, low income or dependence on Centrelink can make it difficult for vulnerable people to access safe and fair credit facilities.

Microfinance and No-Interest Loan Schemes

There are now a range of No-Interest Loan Scheme (NILS) providers who can help vulnerable individuals and families access small amounts of credit and avoid short-term high interest loans.

• NILS loans are without fees or charges and are interest free or low interest depending on the type of loan.
• The loans are available to all persons who meet the eligibility requirements – evidence of low income or reliance on Centrelink income is usually required.
• No reference is made to past credit history.
• Individuals can generally still access the loans if they hold an existing loan or mortgage, they are unable to access normal bank loans because of a change in circumstances or if they are over 70 years of age.
• The loans are essentially for acquiring essential household goods and services such as fridges and washing machines, some medical and dental services, and educational essentials such as textbooks and computers.
• Other microfinance services such as ‘step up loans’ can be used for the repair or purchase of a car or to engage in vocational training.
• Generally the loans cannot be used for paying off or consolidating debts such as bills or fines, be paid in cash, or used for other personal interests.

No-Interest Loan Scheme

The No-Interest Loans Scheme (NILS) is run by a range of not-for-profit organisations and provides vulnerable individuals and families with access to fair, safe and affordable credit.

• The loans range from $300 to $1200.
• Repayments are set at affordable payments over a 12-month period.
• To be eligible for NILS an applicant must hold a health care card or pension card and be on a low income. Applicants must have taken residence of their current address for more than three months. Applicants must also show a willingness to repay the loan.

StepUP Loans

StepUP Loans are a low interest credit facility offered by Good Shepherd in partnership with the National Australia Bank. The direct number for the Marrickville branch is 8571 7814.

• The StepUP loan is similar to the NILS in that it is available to individuals or families who hold a Centrelink Concession Card or receive Family Tax Benefit A.
• StepUP loans are fee free, but not interest free.
• StepUP loans have a fixed low interest rate of 5.99% per annum and can be repaid over three years.
• The loans range from $800 to $3000 and can be used for a range of personal or household purposes such as household items (a fridge, freezer, or washing machine), car purchase and repair, computers, dental care and house repairs.

How to Apply for a NILS or StepUP Loan

• Search for a NILS provider or StepUP Loan provider online or call NILS Freecall Service on 1800 509 994 or Good Shepherd Microfinance on 13 64 57.
• Attend an interview with a local microfinance worker and make an application with the following supporting documents:

1. Proof of identity – such as a Centrelink Health Care Card or Drivers License;
2. Bank statements for the last three months;
3. Centrelink statement;
4. Rental bond agreement;
5. Gas, water and electricity bills; and
6. A quote from a retailer for the products that are to be purchased.

• Once the assessment takes place, and upon approval, the funds are made available for the required purpose.