Mutual Aid Fund
If you are part of a small group, just beginning to set up a social enterprise or community project, and not yet ready to incorporate and borrow large amounts, then our Mutual Aid Fund provides a capacity-building and step-lending approach through self-help organisations run by the members of the group.
LRS offers a wholesale loan product to 'apex' organisations - usually cultural affinity support and self-help groups - as primary borrowers, for lending on to their members as secondary borrowers. The group acts as a financial intermediary between LRS and the group members. Our decision to lend is determined by the maturity and readiness of the group to manage credit, rather than by the viability of individual activities that will be financed by the loans. Responsibility for appraisal and credit rationing is given to the apex group in return for lower transaction costs and greater outreach. The group members buy shares in LRS, and this entitles the group to a loan of four times the total invested by the group - in effect it functions as a credit union. This approach enables LRS to address the financing needs of micro-enterprises requiring loans of less than £5,000.
The loans to the apex groups are for a maximum of £20,000 over three years at a 6% rate of interest, with the whole amount being repaid at the end of the three-year period.
See MAF borrowers for a list of borrowers under this fund.