COUNTY councillors are considering giving a £200,000 start-up loan to the North Yorkshire Credit Union, to enable it to lend from day one, when it begins operating next month.

North Yorkshire County Council, which has supported the development of a county credit union, will consider its request for the start-up loan at an executive meeting on Tuesday.

North Yorkshire Credit Union will be open to anyone who lives or works in the county, providing a secure place for people to save and borrow.

Due to the current economic climate, a significantly higher number of loan requests than was originally forecast is now expected.

The £200,000 start-up loan would prevent the necessity of a three-month lending delay when the new Credit Union comes into being on May 18.

Members of the executive are to decide whether to approve the £200,000 loan.

If they do give the go-ahead to the loan, they will also be asked to set an interest rate for repayments.

The credit union’s development, which has been partly funded by the county council, has recently been given the go-ahead by the Financial Services Authority.

Savings will be protected by the financial services compensation scheme.

The union has been formed by extending York Credit Union (YCU) to cover the whole of North Yorkshire.

It will be owned by members for their mutual benefit, which means that the more money saved and lent out, the better the return for members who will be able to save up to £10,000.

The credit union will give people who have found difficulty in opening a bank account the option of having a savings account.

It will also enable people in those circumstances to borrow at reasonable rates of interest rather than having to deal with loan sharks.

The Local Government Act 2000 gave local authorities the power to give financial assistance to safeguard the economic well-being of an area and a start-up loan from day one would help to retain and circulate money within the North Yorkshire economy.

County councillor Greg White, North Yorkshire’s executive member for economic development, said: “The credit union will provide a vital service to the people of North Yorkshire and will help to support the economy during this period of recession.

“The county council must therefore consider the request for a start-up loan to boost the credit union’s sustainability.”

In a letter to the county council, YCU manager Mike Horncastle said the £200,000 loan would also enable the group to employ two new members of staff to handle the increased workload.

He wrote: “We very much hope you will look favourably on this request and look forward to continuing to work with the county council in delivering credit union services across North Yorkshire.”

The executive committee will meet at 11am, on Tuesday, in County Hall, Northallerton.

For more information about the North Yorkshire Credit Union project, visit ycu.org.uk