Bank-backed loan service inundated with calls


Frances Ronowicz, Head of Community Finances at BNZ, talks about the new low-interest, interest-free loan initiative.

A new financial service offering interest-free, low-interest loans has been inundated with inquiries since it opened in April.

Yesterday, the community funding initiative was officially launched at BNZ Tauranga, three years to the day since the launch of a pilot project in Auckland.

A partnership between the bank, Good Shepherd New Zealand, the Salvation Army and the Department of Social Development; the initiative is an option for people who cannot obtain a traditional bank loan and have exhausted their work and income options.

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It was intended as a better option than predatory lenders who might charge huge interest rates and fees.

Tauranga’s social worker, Chika Adeosun, said she had responded to hundreds of inquiries since starting in April, working three days a week at the Salvation Army Center on Cameron Rd.

She said most of the calls came from people who did not meet the loan criteria, usually because they wanted a loan to pay bills or pay off debts they had already accumulated. The loans were only intended for future purchases.

Ms Adeosun said they could always help by offering clients financial advice and guidance, so they could find themselves in a position where they would be eligible for a loan. She could also direct people to other complementary services.

She said her last job in the collections industry showed its impact on bad debt, and said the experience made her realize how important services “at the other end of the spectrum” were.

“It’s really satisfying for me to be able to help.”

Chika Adeosun, social worker for the community fundraising initiative.  Photo / George Novak
Chika Adeosun, social worker for the community fundraising initiative. Photo / George Novak

At Monday’s launch, The Salvation Army’s director of community ministries, Davina Plummer, spoke about a few people the service had helped since April.

One was a man in his forties who had never had an email address. They gave him a loan to buy a laptop computer to help him with his job search and allowed him to create his first email address.

“It was an exciting time shared when we were the first recipients of an email from her,” Ms. Plummer said.

Another was a single mother of two who received a loan to buy a pram.

“It’s more than a loan, it’s a step towards a better quality of life.”

BNZ Bank’s community finance manager, Francis Ronowicz, said the bank made the loans and assumed the credit risk, committing $ 60 million in long-term national initiative loans.

The Salvation Army’s community finance coordinator Jodi Hoare said that if people are missing a refund, the first step is always to talk to them about what is going on and try to help them resolve the issue.

Community Finance Loans

The Community Finance Initiative offers two types of loans. Neither has administration fees, service fees or penalty fees.

StepUP

– $ 1000 – $ 5000
– Duration of three months to three years
– Interest 6.99 percent p / a fixed
– Weekly, bi-monthly or monthly repayment

Interest-free loans

– $ 300 to $ 1000
– Maximum duration of 12 months
– Of no interest

Use to buy …

– essential household items such as furniture or dishes
– Second-hand cars
– car repairs
– computers
– rental obligations
– medical and dental expenses
– education


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