Big Benefits from Small Loan Program - Report
Thursday, 18th April 2013 at 10:42 am
A new study into a small loan program operating across Australia has found that the scheme is making a big difference to thousands of low income Australians.
The report is based on a survey of 500 StepUP loan recipients, by the Centre for Social Impact (CSI) called A little help goes a long way: Measuring the impact of the StepUP Loan Program.
The findings show that 73.6 per cent of respondents experienced a positive change in economic and social outcomes after receiving a loan through the Not for Profit program.
The report evaluated the social and economic return at $2.68 for every dollar invested in the program – as a result of factors such as a reduced reliance on welfare, savings on fringe credit and reduced stress and anxiety.
The StepUP Loan program is a nine-year partnership between National Australia Bank (NAB), Good Shepherd Microfinance and more recently the Federal Government which delivers loans worth up to $3,000, at 3.99 per cent interest, repayable over a three year period to people who are unable to access mainstream credit from banks and credit unions.
The report says that significantly, 64.6 per cent of loan recipients who used fringe lenders in the past stopped borrowing from them after their StepUP loan, and many others decreased the frequency of their use of fringe lenders.
The new research also shows StepUP loan recipients feel more financially literate and confident in managing their finances, experience improvements in living conditions, have more contact with friends and family, improved confidence and self esteem and reduced stress and anxiety.
Adam Mooney, CEO Good Shepherd Microfinance said that the StepUP Loan Program is helping people on low incomes find a pathway to financial inclusion.
“Our aim is to enable clients to realise their own economic wellbeing – and to feel in control of their own finances and lives. This report shows that the StepUP loan program is realising this vision and creating pathways to financial inclusion for people in Australia.
“It confirms our anecdotal and on-the-ground evidence that the program generates significant social and economic benefits to borrowers and communities,” Mooney said.
On-the-ground loans provider Baptist Community Services – NSW & ACT (BCS), helped to launch the report at an event in Canberra. BCS Chairman, Dr Graham Henderson, said the findings reinforced the importance of the StepUP program.
“Every client and every loan has a story. This report captures the essence of 500 of these stories and it means a lot to hear difference StepUP is making to the lives of so many people. Baptist Community Services is very proud to be providing microfinance loans to people in our community who need fair access to low-interest loans that assist in breaking the cycle of poverty and debt, ” Dr Henderson said.