Small Loans: credit unions best kept secret? An analysis of the economics and opportunity for credit unions serving the small loans market in Ireland.


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Introduced by Dr Olive McCarthy, Director of the Centre for Co-operative Studies at UCC, the paper presents the extensive findings and conclusions of research undertaken by Dr Paul A. Jones and Nick Money of Swoboda and Lorraine Corcoran of Afanite. The research team spoke with credit unions in Great Britain, Canada and the USA, and in particular the Republic of Ireland (ROI) to gather views on the needs of members seeking to borrow €2,000 or less, and how they might be best met. While there are gaps in the data available on the whole market and in relation to credit unions’ activity, analysis shows that credit unions are the predominant provider of these loans in ROI, and they represent 48% of the volume of credit union loans, while high cost providers are also significant players – there may be an opportunity for more if credit unions want it. Segments of borrowers of these loans show a higher risk profile than other loans, reducing the commercial attractiveness of this lending.


The authors conclude that small loans present a conundrum. On the one hand, they are valued and availed of by a significant proportion of members. On the other, they generate minimal income and can be costly to manage, administer and control. Cross-subsidisation of these loans mean that some members cover the costs of other members. How does this balance with the principle in Irish credit unions of solidarity? Small loans are loved, but they are not actively promoted. Credit unions could do more, but is this affordable? If not, who misses out? The issues of price, efficiency and member service are at the heart of this dilemma.

The research was funded by the Irish League of Credit Unions (ILCU). David Malone, CEO of the ILCU says of the report: “I welcome the Swoboda Research in respect of the small loans market in Ireland. In the last year Irish credit unions have issued 200,000 loans less than €2,000. This is so much more than a statistic as credit unions have supported thousands of people to navigate the cost of living crisis by providing sustainable finance.

The research findings have identified important recommendations regarding costs, pricing and enhanced member service opportunities using increased digitisation and automation. We fully support increased data being made available on the small loans market. Loans under €500 are currently not reported on the Central Credit Register (CCR). The ILCU has advocated to the Department of Finance that this threshold be reduced to €200 so that the CCR captures more data on lower value credit in the market. The ILCU will engage and actively support credit unions in evaluating the research findings and applying the relevant recommendations.

The ILCU will facilitate a webinar, NEW REVISED DATE AND TIME 10am-11pm on Monday 5th October, to enable credit unions to hear from the authors and discuss this topic together. Booking details will be made available in due course.