A community bank in Bedford that provides an alternative to loan sharks for low income residents has been given £25,000 from a council-run fund to help it survive the coronavirus pandemic.
The not for profit Bedford Credit Union has been hit by the lockdown because about 33 per cent fewer people have been taking out loans to pay for holidays and there have been fewer visitors to its offices in St Paul’s Square.
Ian McEwen, who chairs the organisation that has 2,000 adult and 800 child members and holds about £2 million in savings, said, “People were paying down their debts during April to June when they weren’t spending money.
“They weren’t going on holiday and we had people saying they did not need their loans.”
The credit union uses interest repayments to pay for its running costs and it needs help to get through the next couple of years as it expects sharply reduced income in this financial year and next.
Mr McEwan said if the credit union did not receive funding it would face having to merge with a larger credit union in about 18 months’ time. It was founded by members of the Holy Cross Church in Goldington back in 1998.
But he added there is absolutely no risk to savers’ money which is also protected by the Government.
Bedford Borough Council’s house of industry committee members are trustees of a fund who regularly meet to decide on applications for grants.
Members of the committee agreed to the credit union’s request to convert a £15,000 loan into a grant, and topping it up with another £10,000.
Lee Phanco, the council’s chief officer for customer experience and digital service, said, at the meeting on Tuesday, “Clearly it is a difficult time for the credit union and they are quite concerned about their overall situation and their need to meet the regulator requirements.
“They have indicated that there is a risk that if they can’t achieve the capitalisation they might have to wind the business up.”
The committee will be seeking assurances and asking for the credit union not to pay any dividend to its members for two years.
Cllr Stephen Moon (Cons, Great Barford) said, “It needs to be fully supported and insofar there is a risk if the £10,000 is lost I would support taking that risk. It is a vital service and I would like to see it expanded rather than reduced.”
The recommendation was approved after no councillors said they were against.
Mr McEwan said he was pleased with decision which means the credit union is about “halfway there” as it makes other applications for grant help.
by David Tooley
Local Democracy Reporter