SWAN Hill Neighbourhood House's No Interest Loan Scheme (NILS) has had its funding slashed by its facilitators Good Shepherd Microfinance and the National Australia Bank (NAB).
Funding for operating costs — which were already heavily subsidised by the Neighbourhood House — have been defunded from $25,000 a year to about $15,000, while the local program's loan funding pool will go from $190,000 a year to a yet to be known lower sum.
As a result of the defunding, Neighbourhood House co-ordinator Lea Johnson said alterations had been made to the way the program was run.
"The program has been changed but we will continue to do loan applications which will be sent on to another agency, most likely metro based," Ms Johnson said.
"Before this transition, Swan Hill Neighbourhood House did the whole process ourselves.
"We looked after our loan book and followed up with clients; it was about supporting the process all the way through."
Facilitated by Good Shepherd Microfinance in partnership with the NAB, NILS provides people with no interest loans up to $1500 for essential goods and services.
Repayments are set to an affordable amount and can be paid off over 12 to 18 months.
"We have been delivering NILS since 2010 and have done 1400 loans over that time," she said.
"It has been an exceptionally successful program because of the relationships we have been able to develop with our clients.
"This is mainly due to that fact that the whole loan process was talked about during the initial consultation, which meant clients could ask questions and we could refer them to other services — it was a holistic approach."
Ms Johnson said changes to the program meant Neighbourhood House wouldn't be able to support its client base as much as it did before.
"It's a shame that it has gone this way because it has changed the dynamics of the whole program in the community," she said.
"If someone ends up in a situation where they need to suspend their payments, they will get a call from Melbourne or Bendigo asking them what's going on.
"Whereas before, they were able to just drop in and we could offer further support if required."
She said there were once more than 70 NILS programs across Victoria, but that had now been slashed to about 40.
Swan Hill Neighbourhood House has 200 active NILS loans at any one time and see up to 15 people per week wanting to apply for new loans.
To read more about this story, grab a copy of Wednesday's Guardian (November 15).