A NEW not-for profit organisation offering loans to people who have been refused credit is being set up in Preston.

Preston Money Line (PML) is a community-owned loan fund and will lend from £50 to £3,000 to individuals, and from £1,000 to £10,000 to businesses that have been refused by mainstream bankers.

John Attwater, who works for Lancashire Co-operative Development Agency, is helping to set up the initiative, which is supported by Aven Central, Preston City Council and European Union funding.

He said: "The cost of borrowing will be considerably less than doorstep lenders and we will give support and help to our customers.

"Loans will be made to individuals who have fallen, for genuine reasons, into a spiral of debt or are trying to get back to work after unemployment. Our loans will also help businesses that have difficulty obtaining loans from elsewhere, and to home owners who are not fully grant eligible to bring their homes up to 'decent homes standard'."

However, Preston Credit Union hit out and claims that the organisation would be in direct competition with them.

Part of the union's aim is to teach people to manage the finances.

"People have to save with us before they can borrow," said the union's treasurer Kate Duebon. "We think people may not bother with us and got straight to PML where they can just borrow money."

Preston's Citizens' Advice Bureau, which advised on £440,000 of debt last year, said that Preston already has high levels of debt.

"Although I would never recommend people to take out loans, there might be extreme instances when I might recommend Preston Money Line to alleviate a problem," said Cheryl Conroy, money advice case worker at the Bureau.

PML is expected to start trading in June and Mr Attwater is looking for members of the community to sit on the board of directors. If you are interested in becoming a director or want more information, contact John Attwater on 01772 203692.