The grocer is offering an “ethical and affordable alternative” to the “ultra-high-interest lenders, or even illegal loan sharks”, which families might otherwise resort to.
The scheme, called Iceland Food Club, is operated by charity-owned lender Fair for You and offers short term micro-loans of £25 to £75. These are uploaded to a dedicated Food Club card and repaid at the rate of £10 per week.
On a £75 loan, repaid over eight weeks, a Club member will pay interest of £2.89. On a £25 loan they pay 40p interest. The maximum allowable credit is £100 at any one time.
According to Walker, the grocer first launched the scheme in 2020 with a pilot in two communities in Yorkshire and North Wales. It has now been rolled out across North West England and South Wales.
The scheme has also, so far, extended more than £1 million in micro-loans, with the support of HM Treasury and philanthropic funders.
“The results, as seen in an early social impact report, are encouraging,” Walker said, announcing the initiative via Iceland’s blog.
“Before we launched the Food Club, 84% of participants went without because they could not afford to buy food, and half were referred to food banks – though even among those who meet the tight eligibility criteria for food banks, there are many who are simply too embarrassed to use them.”
He continued: “Since joining the Food Club, however, 83% of participants tell us that they no longer need to access food banks, 80% report an improvement in their mental health, 85% say that they are less worried about meeting their monthly expenses, and 75% report that they are feeding their children more healthily.
“These are outstanding improvements, but based on a small number of people over a short time period – a more detailed, independent social impact report will be produced this year will tell us more.”