Good Shepherd Microfinance
Supporting people on low incomes to build financial capability – it starts with a conversation
Mary is one of many Australians who live on a Centrelink benefit. By the time she pays for basic necessities such as food, rent and household bills, Mary has little or nothing left to live on for the fortnight.
For Mary, the concept of having money put aside for unexpected expenses is something she simply hasn’t been able to do due to life’s constant pressures.
Good Shepherd Microfinance’s (GSM) flagship “No Interest Loans Scheme” (NILS) program helps approximately 26,000 people each year access a small loan of up to $1,500 for essential items such as purchasing whitegoods, car registration, healthcare or educational expenses.
As the largest microfinance program in Australia, NILS offers people on low incomes safe and affordable credit, through small loans that carry no fees or interest charges.
When her fridge broke down, Mary was referred to GSM and was able to access a NILS loan to replace it. The loan was a welcome alternative to high cost payday lenders, and a relief to her constant financial stress.
Like Mary, many others who are doing it tough appreciate the benefits that a NILS loan has brought to their lives. As one client said: “I felt like I was given a fair go. I was very relieved that I could get these items and then pay them off at an amount I could comfortably afford.”
GSM works with 178 community organisations in 628 locations across Australia to offer safe, fair and affordable financial products and services. GSM’s client centric approach means that all NILS applicants are also offered personal support via a face-to-face financial session with a microfinance worker.
For many, it is the first time they have experienced direct contact with someone who is independent and who wants to help them gain a clearer understanding of their financial situation, their attitude to money and borrowing choices.
Financial Literacy Australia (FLA) funded research into GSM’s programs that showed direct contact and interaction between microfinance workers and potential clients as part of the NILS application process was extremely effective.
“We found that regardless of whether or not the loan is successful, the conversations provide tremendous value in strengthening individual financial capability and wellbeing,” said Dr Vinita Godinho, General Manager Advisory for Good Shepherd Microfinance.
Recognising that ongoing support is essential for sustaining confidence in financial matters over time, FLA funding also supported GSM’s trials of digital solutions, such as budgeting apps and text message ‘nudges’ sent to clients during the loan repayment period to build their financial capability and confidence.
GSM is using the research results to develop additional “touch points” with clients such as through their mobile phones.
“We believe that personal support combined with the delivery of financial products and services can give our clients confidence to move from financial hardship towards financial stability,” Dr Godinho said.
GSM’s NILs program is achieving wonderful outcomes − four out of five clients such as Mary who used payday lenders in the past have stopped using them since accessing NILS.