A low-income retiree could no longer cope with his smaller loans with his retirement income.

Then the computer broke and also the teeth.

The city came to the rescue, arranging the loans into one zero-interest social loan.

The man got a new machine and money for a private dentist.

A retired woman once wanted to have a decent birthday party in her life.

He had no couch or furniture purchases made for 30 years.

The woman received money from the city for a sofa, dining table furniture and a birthday party for a few friends.

Such small loans granted by municipalities, social loans, have also been used to finance, for example, a child's skates, a bicycle or a washing machine.

Small and big things at the same time.

  • Read more: These municipalities grant zero-interest loans to the poor - a bill to expand social credit nationwide

Currently, only a few people receive social credit in proportion to the number of people with debt problems.

A loan can be obtained if you happen to 1. live in the municipality where it is even granted 2. the municipality really has money for this and 3. the amount of debt happens to match the terms of the loan.

The supply of social loans should be expanded much from the current one, so that the growing problem of over-indebtedness of Finns, exacerbated by the corona epidemic, can really be caught.

There can be a variety of causes behind debt hell, such as unemployment, illness, or divorce, a spiral that would come up on its own without wild interest and other debt service costs.

Social lending is carried out in recent years by a declining number of municipalities and the Guarantee Fund.

In addition, there are commercial financiers in the market, some of whom may have a sensible repayment arrangement for certain types of customer groups.

Then there are a number of credit providers that advertise arrangement loans as a rescue for a debt problem.

In practice, this is just a new consumer loan drawn into the interest rate cap pin.

In addition to paying off old debts, social credits are needed for so-called investment-type acquisitions.

It was they that were originally intended for social credit.

In addition to the recent examples mentioned above, microcredit may be needed by the poor to support employment opportunities, maintain health or move, among other things.

Social loans are risk loans.

It is estimated that perhaps less than 10 percent of social loans go unpaid.

A small part of the group is unable or bothered to pay off these debts as well.

At the Guarantee Fund, however, credit losses have been reduced to very small by developing operations.

Credit risks should not be feared too much, as money is also dug back from these difficult customers, for example in Helsinki and Tampere, through compulsory collection and foreclosure.

Everyone still benefits from the functioning of social credit.

For example, when a city pays off a customer’s foreclosure debts, which knock out interest and expenses each month, the income is enough to live on.

The customer still pays social credit installments, but the costs of foreclosure are significantly less.

In this way, he leaves Kela's basic income support, which saves public funds.

Last year, there were about 258,000 debtors.

Where does the money come from?

A study and a bill to expand social credits throughout the country are being prepared.

The financing of the model and the organizing body are key issues.

Many think that the state and Kela could be a more natural option for municipalities.

Financing the broader model of social credit can be difficult to get through as an interest rate pandemic knocks the economy.

Government indebtedness is a cause for concern, but on the other hand, the international credit market receives money at very low interest rates.

More information is needed on how much society would benefit from more effective means of arranging over-indebted loans.

Expanding social credit in one way or another as a tool to help genuinely over-indebted people would be a reform with nothing but winners - except perhaps collection and quick-tip companies.