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The Personal Microfinance Credit Scheme: Pilot findings

Last November, some 30 Credit Unions (CUs) signed up to a pilot scheme that was designed to provide low-cost loans to those with the most need for them – people who were facing financial exclusion. This Private Microfinance Credit Scheme, commonly referred to as It Makes Sense loans, was made available through CUs at very low interest rates. The programme was spearheaded by former Minister for State at the Department of Social Welfare, Kevin Humphreys TD, in association with the Department of Finance, the Social Finance Foundation and other interest groups.

In June last year, Chief Executive of the Social Finance Foundation, Brendan Whelan, said:

“The scheme will be designed to meet the needs of those who most need it, in terms of simplicity, convenience, speed and affordability.”

More so than that, the creation of the scheme was in an effort to entice people on very low incomes away from money-lenders, who often charge interest rates of upwards of 150%.

After eight months of operation, a survey of borrowers, credit unions and stakeholders was done. The results have been overwhelmingly positive.

The survey of borrowers found that before participation in the scheme, over half (52%) had gotten loans from money-lenders. A further 22% had thought about going to a money-lender for a loan. When talking about the results of the scheme, the vast majority (90%) of borrowers rated the Credit Union as “good” or “very good”, and said that they would borrow from their CU again. Over 80% said they would recommend the scheme to friends or family. Nearly half (47%) attributed positive changes in how they handle money to participation. Overall, 90% of those questioned said the scheme had a positive effect on their life.

The survey of CUs[ii] found that the main driving factor for getting involved in the pilot was for “social good”. From their perspective, they believed it had a positive effect on borrowers. Many CUs noted that schemes like this were part of the Credit Union movement’s social ethos.

The survey of stakeholders[iii] felt positive about the fact that this microfinance scheme was offering normal credit to a group of people who were “otherwise excluded from accessing mainstream credit”. Also, it helped the CUs in delivering on their core purpose.


To avail of an It Makes Sense loan, there are certain criteria you must meet.

First, you must be over 18 to avail of these loans. At present, the microloans are solely available to those in receipt of social welfare payments. You must also qualify for the Household Budget Scheme run by the Department of Social Protection. When a loan is agreed, weekly repayments are paid out of the borrower’s social welfare payment through the Budget Scheme. Alternatively, if the borrower’s social welfare payment is paid directly into their bank account, they can set up a standing order to repay the weekly amount.

Loans of as little as €100 and as much as €2,000 are available. Repayments can be spread over a minimum period of one month, and a maximum of two years. The loan can be requested for any reason. The repayments will be subject to a maximum interest rate of 12%, or 1% a month (12.68% APR).

If you are not a member of your local Credit Union, you can create an account on-the-spot and be automatically eligible for an It Makes Sense loan. CUs aim to have a decision back to applicants within 24 hours.

Department estimates suggest that the average loan is taken for roughly €500. Since the beginning of the pilot, more than 1,200 loans have been drawn down, to the value of €720,000.

Nationwide Roll-out

Due to the success of the pilot, Minister for Social Protection, Leo Varadkar TD, announced this week (Tuesday 26 July) that the scheme would be available for all Credit Unions across Ireland. This will establish a permanent footing for It Makes Sense loans. The extension meets a commitment made in the Government’s Programme for Partnership Government. So far, the Department has had 18 applications and 50 expressions of interest from CUs. The Minister has urged other Credit Unions to sign up and make the microloans available to those in their area that need it most.

Speaking at the announcement, the Minister said:

“This small loans scheme represents real practical help for families and individuals struggling on low incomes. Many of the participants may struggle to get credit elsewhere, and may not have a bank account or savings … This new scheme will ensure access to small loans at reasonable interest from the credit union, with the option of repaying the money through my Department’s Household Budgeting Service … There is clearly a demand for this type of scheme and the pilot shows it is providing a realistic alternative to high-cost moneylenders by offering a convenient, low-cost personal loan scheme.”

He also noted that having made the repayments will strengthen the credit score of the borrower.

Support from Credit Union bodies

Both the Credit Union Development Association and the Irish League of Credit Unions (ILCU) have expressed their support for the scheme. The ILCU is a part of the programme’s implementation group, and is currently working on extending it nationwide. Their CEO, Ed Farrell, commented on the social good of the project. At the announcement with the Minister, he said:

“Providing access to credit for those who need it most is at the very heart of the work of credit unions. We are all very aware of the penal interest rates charged by moneylenders across the country. This scheme can play a vital role in helping people to avoid getting trapped in a cycle of high interest debt”.

The scheme is still run on a voluntary basis. A list of participating Credit Unions can be found on the Citizens Information website.


[i] Based on 138 participants surveyed on the phone and participants in three focus groups.

[ii] 17 of the 30 Credit Unions in the pilot responded to the questionnaire.

[iii] Based on interviews conducted with all

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