How East Sussex Credit Union is bridging divides through financial inclusion

Thursday 11 January 2024

In East Sussex, an area with one of the highest homelessness rates in England, East Sussex Credit Union (ESCU) is addressing the need for affordable loans.

Working with a local charity, ‘Umbrella Brighton and Hove’, a fund which helps homeless people secure accommodation in the private rented sector, the credit union is providing interest-free loans for rent deposits, rent in advance and letting agents’ fees. Applicants are encouraged to save while they repay the interest-free loan. As the loans are repaid, the money is available to be lent to other members.

“This project helps people move out of hostels. They can’t afford rent deposit so it funds rent deposits for them,” says ESCU Chief Executive, Ann Hickey.

One member said: “I felt my situation was hopeless and that I was very alone and stuck in a bad position, not having a guarantor or means to get enough of a deposit to move into a more permanent address. My support worker told me about Umbrella and together we made an application. Within a month I was able to secure the funds and move into my new studio flat.”

To stop people in the area becoming homeless the credit union also works with the local council. Those who struggle to keep their rented homes are offered a deposit guarantee scheme run in partnership with the council. The council puts a bond with landlords to say they will cover that deposit but tenants have to save by joining a credit union. Over 750 people joined ESCU through this scheme, amassing £235,000 in savings.

ESCU is also working with England Illegal Money Lending Team (EIMLT), which investigates and prosecutes loan sharks while supporting those who have borrowed money from them. With support from EIMLT, the credit union delivered the anti-loan shark message at several Pride events in the county. The credit union was highly commended in the Stop Loan Sharks Champion Awards of 2019.

Asked how ESCU can carry on so many projects, Ann says volunteers play a key role. “We couldn’t have gotten where we are without volunteers and our board – all of whom are volunteers as well. We have a strong volunteering culture here.”

In spite of the success of such projects, raising awareness about what credit unions do remains a challenge, warns business development manager Emma Brown.

“A lot of people don’t know what a credit union is,” she says. “Credit unions are not something people tend to talk about. When I go out doing a presentation to people my first question is do you know what a credit union is? That is a hard battle. The government gets that social lenders are a good alternative to high-cost lenders and are trying to support us, but there’s a lot of us and a lot of need so there is a struggle to be able to compete with other lenders.”

The total membership of ESCU is now more than 8,300, with over £3m in savings. Since it was first established the credit union has lent out £12.4m, with over £1.5m in 2018/19.

Source – Coop news