NILS® Info for Community Groups What are NILS®?

What are NILS®?

No Interest Loan Schemes NILS® are a community based program to help low income people buy essential household items, such as a washing machine, fridge or medical appliance. Many low income households get by week to week, but are completely stuck when they need to buy an expensive appliance.

A typical NILS® loan is for around $600 – $1,200 and repaid over 12 - 18 months. As loans are repaid, the money is lent out again to other people. A $10,000 loan fund will allow the purchase of about $100,000 worth of appliances.

NILS® are based in community organisations such as neighbourhood centres or local welfare centres. Most schemes serve a geographical area. Some schemes have a narrower target group, such as older people or people with cancer.

Philosophy

The basic philosophy behind the provision of No Interest Loans is:

• To offer low income consumers credit on fair and reasonable terms.
• To provide low income consumers with access to credit, without the burden of high interest charges.
• A belief that all people should have access to essential household goods for which credit is often a necessity.
• A commitment to an assessment process which includes a determination of the applicant’s capacity to repay the loan.

Target group

In general, loans are only made to people whose main income is social security (eg on a pension, benefit, allowance or maximum Family Assistance). Typical NILS® borrowers are unemployed single mums, old age pensioners and people on disability pensions.

However, No Interest Loans do not suit everyone. If people can access commercial credit on reasonable terms, they do not need NILS®. On the other hand, people in financial crisis cannot budget to make loan repayments and are therefore not suitable for NILS®.

Do NILS® really work?

NILS® have been proven to work. On average, around 90% of loans are repaid, allowing money to be recycled to further borrowers. The community base is critical to NILS® success.

NILS® have been operating in Australia for 26 years. Good Shepherd Youth & Family Services in Melbourne started the first scheme in 1981 and the idea has gradually spread since. There are now schemes in all States of Australia, with 34 NILS® in NSW. The challenge now is to spread schemes further to meet the huge need.