UK lenders trial government-backed loans for risky borrowers

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A handful of small UK commercial lenders are offering interest-free loans to high-risk borrowers, as part of a government-backed scheme to support people through the cost of living crisis.

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15 Aug 2023

Over the course of a two-year pilot, the British government will funnel 45 million pounds ($57.18 million) from its Dormant Assets Scheme to London-based nonprofit Fair4All Finance, which is distributing some of the funds to lenders.

In March, the government said 76 million pounds recovered from the scheme, which is designed to redirect money from forgotten accounts to good causes, would be used to support those struggling with surging prices.

Reuters has confirmed that Social Credit, a collaboration between commercial startup lender Plend and two nonprofit organisations, has been delivering interest-free loans as part of the scheme.

Other organisations involved in the pilot include nonprofit Fair For You, and the South Manchester Credit Union. Fair4All declined to comment when asked to confirm the names of participating lenders.

A hole in the credit market,