The Social Case
“It has taken me away from using high-interest payday lenders and put me on the right path. Thank you so much. You are a life saver.”
A single investment in non-transferable deferred shares provides ongoing benefits far beyond the amount invested. While London Capital Credit Union (LCCU) can raise loan capital through members’ savings, there is a regulatory requirement to hold capital representing 10% of their assets. For example, an investment of £100,000 of deferred shares will allow LCCU to release up to £1m to lend each year. With a typical loan repaid within a year the money can be lent out time and again multiplying its effect.
In 2013, analysts from a well-known City institution performed an assessment of the social and financial impact of LCCU's lending business. They concluded that on average for every pound that London Capital Credit Union lend to clear existing debts, members save £1.25 each year in interest, bank charges and fees.
So £100,000 of deferred shares allows £1m to be lent and leads to £1.25m in benefits to members in a single year, and over four years members could save some £5m of loan costs. This is money that is likely to be used within the community and therefore provide further benefit by supporting local business and creating local employment opportunities.