Is a not-for-profit home credit business feasible?Authors: Professor Elaine Kempson, Anna Ellison, Claire Whyley, Paul A Jones
Funded by: Joseph Rowntree Foundation
Published by: Joseph Rowntree Foundation
Publication date: March 2009
ISBN: 9781859356920 (PDF)
This study tests the commercial feasibility of a not-for-profit home credit service.
The seizing up of wholesale markets, combined with tightened lending criteria, has created a credit supply crisis among vulnerable borrowers, many of whom rely on home credit. Commercial home credit is long-established, with large numbers of low-income customers. It has many features that are valued by its customers, but the cost is high.
This report addresses:
- The essential elements of a not-for-profit service as identified by customers and lenders. These are home collection, a single price under-pinned by cross-subsidy, flexibility with regard to payment and debt recovery for people who genuinely cannot pay.
- Development of a business model that adopts the operating experience of commercial home credit providers, covering running costs in year five. Even on a not-for-profit basis, the cost will be high if the service is to be financially sustainable.
- Identification of a stand-alone provider as the best option for delivery.
The research was undertaken by PFRC in partnership with Anna Ellison (Policis), Claire Whyley, Paul A Jones (Liverpool John Moores University) and Mark Lyonette (Association of British Credit Unions Ltd).
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