Iceland store

Source: Iceland Foods

Iceland pays the interest on behalf of the borrower

Iceland Foods’ interest-free microloans scheme is set to be extended, with a further £2m investment to mark the anniversary of its launch.

The retailer launched The Iceland Food Club in conjunction with the charity lender Fair For You in August 2022 as a means of helping customers who are struggling to afford food.

The scheme provides customers with zero-interest microloans of between £25 and £100, loaded on to a pre-paid card that can be used in Iceland stores and online. It has helped over 23,000 families and distributed more than £5m in the year following its nationwide launch, according to Iceland.

Fair For You has received £2m investment from Fair4All Finance, a not-for-profit organisation that works to improve access to financial support schemes. The funds are to be used to extend the support provided under The Iceland Food Club.

“We have seen the remarkable impact that the Iceland Food Club has had in supporting struggling customers through the cost of living crisis,” said Iceland Foods executive chairman Richard Walker.

“Setting up the Food Club alongside Fair for You has been one of the most innovative partnerships we have formed as a business, and we know it has been a lifeline for so many families who now have a workable solution for affording essential goods.”

Iceland first started offering what it termed “ethical loans” in January 2022 as part of a limited trial with 5,000 customers. Initially the loans had a small interest rate equivalent to 55.6% APR.

However, Iceland said it would begin to pay the interest on the borrower’s behalf, after the scheme was extended nationwide, essentially making it interest-free for the customer.

Repayments are set at £10 per week, though customers can overpay if it is convenient to do so. Customers are also able to apply for top-up loans, but only during six school holiday periods.

“Around a quarter of households in the UK have less than £100 in savings which makes holiday periods very stressful,” said Simon Dukes, CEO at Fair For You.

“Fair for You is delighted to make life easier for tens of thousands of Iceland customers who can’t always afford a big grocery shop but who can afford a small interest-free loan, which is paid back within weeks, to help them and their children through the holidays.

“The additional investment from Fair4All Finance will enable us to reach even more people who will truly benefit from the Food Club.”

Andy Street, former John Lewis executive, and mayor of the West Midlands, where Fair For You is based, praised the social impact of the scheme on communities in his area. 

“I am delighted to see that Fair for You is growing and flourishing, and that Iceland Foods, a forward-thinking and community-minded retailer, is helping it to support families across the UK,” Street said. 

“I hope that other retailers will consider what they can do to better serve customers facing financial difficulty, and that organisations supporting hard-pressed households will take note of this important scheme.”