Iceland is offering loans to hard-pressed shoppers to help them buy food, supermarket general manager Richard Walker has revealed.
The frozen food specialist offers an “ethical and affordable alternative” to “super-high-interest lenders or even illegal loan sharks” that food-insecure families might otherwise resort to, Walker said.
Called Iceland Food Club and run by charitable lender Fair for You, the scheme offers short-term ‘microloans’ of Â£ 25 to Â£ 75, repaid in weekly installments of Â£ 10. The interest rate payable is 45%, equivalent to 55.6% APR, according to Fair for You.
A charge of Â£ 75 repaid over eight weeks would attract interest of Â£ 2.89, Walker said in his latest blog post. A loan of Â£ 25 would attract interest of 40 pence.
The maximum credit allowed at any time is Â£ 100.
The loan is transferred to a Food Club card, which can be used to pay for online or in-store purchases, exclusively at Iceland and The Food Warehouse.
According to Walker, Iceland first piloted the initiative in two communities in Yorkshire and North Wales in 2020. It has now rolled out in North West England and South Wales. Wales, offering more than Â£ 1million in loans so far, backed by HM Treasury and philanthropic funders, he said.
His blog is the initiative’s first Icelandic announcement.
âThe results, as seen in an early social impact report, are encouraging,â Walker said. âBefore launching the Food Club, 84% of participants went without because they could not afford to buy food, and half were referred to food banks – even if among those who fill up the strict eligibility criteria for food banks, there are many who are just too embarrassed to use them.
âSince joining the Food Club, however, 83% of participants tell us they no longer need access to food banks, 80% report improved mental health, 85% say they do. are less concerned with meeting their monthly expenses, and 75% say they feed their children in a healthier way.
âThese are remarkable improvements, but based on a small number of people over a short period of time. A more detailed and independent social impact report will be produced this year, which will tell us more.