It’s a Wednesday afternoon in Manchester and once again it’s raining. I push my bike along the pavement in front of a nondescript row of shops near Burnage train station, looking for number 187. As I walk along, I notice a poster that’s somewhat out of place on this miserable February afternoon. It’s advertising loans for holidays, but it’s no travel agency.

I step through the doors of South Manchester Credit Union (SMCU). It’s an unassuming shop. A few desks, some computers, its modesty belying the incredibly important role this place plays in the locality. Up until a few months ago, I was totally unaware of credit unions. I thought that the only place you could go for a loan is to your bank, building society or one of the countless websites which offer you “instant cash”, no matter your credit rating. Or, of course, your mum when you need £20 to go to the pub.

I start chatting with Sheenagh, the manager of SMCU. Sitting down with a glass of water, she explains what it was that inspired her to work for a credit union. “The ethics of credit unions stand out a mile and are so strong. They’re not-for-profit, or not for a lot of profit. We need [some profit] to grow, and we try to set our prices at an affordable level and give services that people need.”

A non-profit loan organisation that sets affordable rates? I didn’t believe it was possible. Sheenagh elaborates on what separates credit unions from your typical high-street lender. “Everyone who is customer is also member and owner. You’re not reporting off to shareholders who have different demands. It’s the same people that you’re serving. The people going out of the front are the people who own it. It’s simpler. It’s a natural model for doing finance that people who have a connection with each other, a common bond, save together. They all belong to an area they care about and so hopefully they care about each other.”

The community element and non-profit ethics seemed out of place in relation to our typical stories of financial institutions and I was starting to like the sound of it, so I ask Sheenagh for some specifics. How would I get involved?

“First, you have to join and become a member. You have to be a member. The three words are ’Join, Save, Borrow’. There’s a one-off charge of £3 and, once you’re a member, we encourage saving, as each person individually makes a difference. It raises the capital the credit union lends. Some people just want that. If they’ve come for a loan or we think they might need one, we talk about how that works too.”

“If you’re on a lower income and have no savings, we talk about how that works. One option is to have your benefits paid here. It’s a lot of trust. Your income comes here, we take a slice for loan repayments and then the rest is paid back, but you can pay back through standing orders too.”

I ask about their typical customer profile and Sheenagh is, understandably, reluctant to stereotype. “I don’t want to put people into boxes, but we have a lot of female members. Single parents in their 20s or 30s who are managing their money very well. They see us as a reliable source of credit.” I tell Sheenagh that I find it heartening to hear that some of the most financially vulnerable in our society aren’t being forced to turn to high-interest payday loans, something Sheenagh agrees with. “Payday loans are fast food, instant gratification, but credit unions are slow, good, healthy food. It takes a bit more effort, but you know it’s good for you.”

It’s the next thing she says that makes me realise just how different credit unions are to other lenders. “The best thing is speaking to someone who comes in with no savings and then strongly encouraging them to save. 18-24 months later, they ask how much they’ve saved and they’ve got £250. The difference it makes is amazing. They have a different view of themselves and it changes everything. Especially for people who don’t have that mindset and don’t think they can do it. It changes the way they view themselves.”

When I ask why it is she thinks more people don’t use credit unions, she laughs. “I’m not sure what puts people off. We’re the best kept secret. We can’t offer full banking facilities. It’s not the same as in America and Australia, where they’re stronger and can offer a fuller range of services. Over there, you can just have a credit union, not a bank account. Over here, we’re not at that stage, and we want to be able to offer the full package.”

The difference in attitude to credit unions is also startling over our closer borders.

“In Ireland they’re stronger, same as in Scotland and Wales, but in England we’re weak. Credit unions grow through word of mouth and recommendations and building trust. It takes time. People want to watch. They will come and ask for information and then come back. They need chances to understand and come back and see. Credit unions don’t have much time and resources to get out and communicate.”

Sheenagh remains positive though. “Once people know about us, they don’t look back and become loyal. A high number of people come back for further loans. Once they’re in a pattern, they’ll come back regularly and recommend us. The loyalty level is high.”

Community-based saving, where your money goes into the pockets of those who need it most, rather than into the vaults of some distant bank. It sounds too good to be true, but it isn’t. The only thing stopping these fantastic organisations growing and becoming more powerful is people like me and you not using them. By choosing to save with a credit union, we keep funds within a local area and ensure that those who are rejected by banks due to poor credit ratings aren’t forced into the hands of payday loaners.

In a society that is forever focusing on ethical solutions, be it cosmetics that aren’t tested on animals, fair trade coffee or sweat-shop free clothes, it’s interesting that there isn’t so much of a focus on ethical lending. By saving with a credit union, however, you would be doing just this. No more the ‘poor man’s bank’ of old. They offer a viable, alternative to our current way of doing things, and they are protected by the Financial Services Compensation Scheme. And with over 500 of them in the UK, there’s sure to be one near you.

smcreditunion.co.uk

David Ewing