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Microfinance loans and solutions to problem debt

Helping people to access safer credit and reduce their debt are key parts of Building Financial Capability. Two inter-related services are now available to help achieve these aims: Microfinance lending and Debt Solution services.

Affordable and fair loans

The Ministry supports two not-for-profit providers of affordable and fair loans with operational funding:

Good Loans

The Community Finance partnership of Good Shepherd New Zealand, BNZ bank and the Ministry of Social Development offer two types of Good Loans:

  • Interest-free loans up to $1,500 for assets and personal wellbeing services
  • Low-interest loans (6.99% per year) for larger assets up to $5,000, to be repaid over 36 months.

Ngā Tāngata Microfinance

Ngā Tāngata is a registered charitable trust and company that makes interest-free loans an ethical alternative to high-cost lenders.

  • Loans for items for clients’ wellbeing (not cars) up to $2,000
  • All loans are 100% interest-free, with no administration fees or hidden costs
  • All applications must be made with the assistance of Building Financial Capability financial mentors or FinCap affiliates.

There are no fees or charges for Microfinance loans, and banks provide the loan capital. Individuals and families can only apply for loans if other government agencies are not providing similar services. No cash loans are available.

Contact the Microfinance providers:

Debt Solution services

From November 2020, additional funding is available to strengthen existing debt solution services with access to debt specialists, and develop a national approach to address problem debt.

Anyone with problem debt can now access help through BFC services. The range of Debt Solution services include expanded specialist debt support services and loans for debt consolidation.

The aim is to benefit creditors and debtors, and the wider economy by maximising the flow of potential payments to creditors while sheltering indebted individuals and whānau from the financial, health and social impacts of overwhelming debt.

Two types of service are available, with four specialist providers in total:

Debt solutions specialised services

These services advise clients on debt solutions that can improve their financial wellbeing. Provider tools may include:

  • support and debt counselling
  • developing negotiated debt options including insolvency
  • management of some/all of a person’s finances
  • debt restructuring.

Contact the Debt solutions specialised services:

Debt consolidation loan services

These services advise clients on debt solutions that can improve their financial wellbeing. Provider tools may include:

  • debt advocacy and debt counselling
  • loans that enable consolidation of harmful debt(s) into affordable repayments
  • other no or low interest loans for debt repayment.

Good Shepherd New Zealand offer DEBTsolve StepUP Loans of up to $10,000.

Ngā Tāngata Microfinance work with financial mentors and ‘budgeting’ services to develop individualised debt consolidation and repayment plans for their clients.

Contact the Debt consolidation loan services:

A national approach to address problem debt

Debt Solution services are interim services, funded till 30 June 2022. They are set up as an immediate response to the economic impacts of COVID-19.

While this is under way, this initiative will support a service design with the sector of ongoing debt solutions for all New Zealanders, informed by the course of COVID-19 and the operation of the interim services.

The Ministry of Social Development will lead a service design process that will build on the existing BFC co-design and the depth of research that providers bring to the table. We will engage with providers and diverse communities to design an on-going national approach to address problem debt for all New Zealanders.

Additional information on the service design will be added here as it comes available.

Service Guidelines

These Service Guidelines provide information and guidance on every aspect of delivering the interim Debt Solution services. Ministry of Social Development-contracted providers’ Outcome Agreements require that all services are delivered in accordance with these guidelines, effective from 30 October 2020.

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