A non-profit financial centre that has opened for business in Winnipeg's North End hopes to help low-income residents get a handle on their finances — and steer them away from payday lenders and other companies that provide fast loans with high interest rates.

The Community Financial Services Centre opened its doors at Main Street and Stella Avenue Thursday and will begin to accept clients this week.

The centre is a two-year pilot project of the North End Community Renewal Corporation (NERC), a non-profit agency that promotes social and economic renewal in the city's North End in co-operation with 12 local organizations.

"Right here in the middle of the pawn shops and the payday loan counters, we're building a financial oasis," said Astrid Lichti, a board member with NERC.

"We believe it's a real option for people and one more stepping stone out of poverty."

Helps clients get on financial track

To become clients, applicants must agree to financial counselling. Potential clients may be referred to the centre through North End community organizations or word of mouth.

In exchange, the centre will help approved clients establish a good financial track record. Clients will receive access to photo identification, bank cards, bank accounts, automatic teller machines and cheque cashing.

It will provide short-term microloans of $20 to $100 at interest rates of three to five per cent — well below the 60 per cent maximum annual rate set in the Criminal Code and with no service fees that payday lenders charge.

As well, centre staff can educate clients on how to navigate the financial world.

Those community-based services offer hope to Beryl Raven, the centre's first official client.

"I used to use the payday loans a lot because by the time I got home from work, my banking institution was closed already," she said Thursday.

"I would get my cheque and go over to the cheque-cashing place, and by the time got my money back, it would be like $10 on $100 that I was paying."

That $10 eaten by fees "is my food money, it is my bus fare money to get to work next week and then the process starts all over again," she said.

Project funded by credit union, governments

The project is supported by Assiniboine Credit Union, one of Manitoba's largest finacial co-operatives. Three levels of government have also thrown their support behind the centre, providing a total of $300,000 in funding.

"We are not a for-profit business. I think that's a key difference," manager Debra Joyal said Thursday.

"Break even? Well, that's why we have our partners from government that believe in what we're doing, because the education and counselling piece is huge. And that's what no other payday lender can do."

The centre opened in a temporary space at the Mount Carmel Medical Clinic. Next spring, it will move down the street into a former CIBC branch building.

Filling a need for neighbourhood banking

The project has been in the works for three years, since the University of Winnipeg released a report that tracked the rise of fringe financial services in the North End.

Report author Jerry Buckland said Thursday that low-income people — many of whom don't have access to cars, the internet or even telephones — faced few banking choices when traditional banks closed their neighbourhood branches in recent years.

"Payday lenders, cheque-cashers, pawn shops, they're very common now in the North End, in the inner city and increasingly in middle-income neighborhoods," Buckland said.

"[They're] offering a basic set of financial services, like cashing your cheque, getting a small loan, but they're providing them at a fee that's pretty hefty."

Buckland said Winnipeg's pilot project is the first of its kind in Canada, adding that he hopes it will become a new banking model across the country.