Minister Humphreys announces permanent support to Credit Union Small Loan Scheme ‘It Makes Sense’

Minister for Social Protection, Heather Humphreys TD, has today announced that an initiative to support low income individuals and families by giving them access to Credit Union loans is to be made permanent.

It Makes Sense, a Personal Microcredit Scheme initiative, is a Credit Union loan scheme offering small loans at a low interest rate for people in receipt of a social welfare payment.

The Scheme provides affordable credit to people on a low income and aims to reduce dependency on high-cost credit providers.

Most repayments of loans under the scheme are made through An Post’s Household Budgeting facility, which incurs a fee of 25 cent per transaction, borne by Credit Unions. The Department of Social Protection, recognising the burden these fees place on Credit Unions and wanting to ensure the continued availability of this important loan scheme, has been paying these fees on a pilot basis since January 2020.

Based on the success of this pilot, the Minister is today announcing the permanent establishment of this payment in Statute in the Social Welfare Consolidation Act 2005 (as amended).

Commenting today, Minister Humphreys said:

“I am delighted to announce that the ‘It Makes Sense’, which is rolled out in partnership with our Credit Unions, is to be made permanent.

“This scheme is an important low-interest credit option for people in receipt of social welfare supports, who are in need of small loans and who may otherwise turn to high-cost credit providers.

“The payment by my Department, on a permanent basis, of the transaction fee for repayments through the Household Budgeting Facility will ensure the continued availability of this small but important loan scheme across Ireland.

“I know from my days working in a Credit Union the challenges placed on families and individuals on low income who are in need of small loans. I welcome that over half of Credit Unions are offering this scheme, in over 280 locations, and that it is available to non-members as well as members.

“I am delighted that, thanks to my Department’s support, we will see the continued availability of ‘It Makes Sense’ as an important small loan alternative to high-cost credit, and as a stepping stone for people to build up a good credit history and move on to standard loans from their Credit Union”.

Welcoming today’s announcement, David Malone, Chief Executive Officer of the Irish League of Credit Unions, said:

“I welcome the Government’s extension of the payment of transaction charges for Credit Unions participating in the Personal Microcredit initiative, known as the It Makes Sense loan scheme. This scheme was established in 2017 and is an alternative to high-cost credit providers. For me, this niche but important loan scheme also highlights the essential role Credit unions play in communities around Ireland. Credit Unions are in every community in Ireland and provide savings and loans to members on a not for profit basis.”

Notes

The Personal Microcredit initiative ‘It Makes Sense’ was launched by Credit Unions in 2017 and offers small loans (up to €5,000) at low interest rates to borrowers on low income and in receipt of social welfare payments. It aims to provide a viable and affordable alternative to high-cost credit providers.
The scheme is also designed to offer an opportunity for an individual to build up a good credit history and move on to standard loans, and ultimately, to access other financial services and products available from their Credit Union.
Applicants for this scheme do not already have to be members of the Credit Union. Once the person lives or works in the area, the Credit Union can process their application. As with any loan scheme, borrowers must be able to show a capacity to repay the loan and the final lending decision will rest with the local Credit Union.
Most loan repayments are made by social welfare recipients through the Household Budgeting facility operated by An Post, which incurs a fee of 25 cent per transaction. Currently, 5,400 It Makes Sense loan repayments are being facilitated weekly through the Household Budgeting facility.
Just over 50% of all Credit Unions are signed up to participate in It Makes Sense - 95 credit unions are signed up, and including sub offices, the scheme is available in 281 locations nationwide. These credit unions are spread throughout the country.
On a weekly basis, over 5,400 individuals are repaying small credit union loans under this scheme.
The majority of borrowers accessing It Makes Sense loans are on disability payments, job seekers allowance or lone parent allowance.
Since January 2020, on a pilot basis, the Department of Social Protection has been paying these transaction fees to reduce the financial burden on Credit Unions and to ensure the continued availability of the loan scheme. This payment is now permanent by means of an amendment to Section 290 of the Social Welfare Consolidation Act 2005 (as amended).
The legislative amendment also increases the loan value under the scheme from €2,000 to €5,000, to reflect inflation and increased cost of living since the scheme was established in 2017, and aligns the legislation with the Credit Union (Amendment) Act 2023 in terms of the interest rate.

Information on the scheme and regular updates, including the list of participating Credit Unions are available at www.itmakessenseloan.ie.