Credit Union

Credit Unions

Credit unions are not-for-profit organizations that range in size from small, volunteer-only operations to large entities with thousands of members. The basic business model is that members pool their money in the bank in order to be able to loan money to each other and achieve these financial benefits.

Understanding Collateral

Bank loans are usually the least expensive way to finance a small business. However, it is not easy to get a bank loan, as banks have strict standards for lending. As a general rule of thumb, banks will require a borrower to put up collateral for a loan. The only exception to this rule is for clients who have a long-term relationship with banks and whose business has proven to be profitable over a multi-year period.

Raising The Credit Union Lending Cap Would Benefit Small Businesses

National Association of Federally-Insured Credit Unions (NAFCU), the trade association representing the interests of federally-insured credit unions, continues to urge government officials to raise the member business lending (MBL) cap for credit unions. Banks have long opposed this action. The  Congressionally-imposed statutory cap on credit union member business lending, established in the Federal Credit Union Act as part of the Credit Union Membership Access Act,established an 12.25% asset cap (with loans of only $50,000 or less exempt from this ceiling).

Small Businesses Score Points in Bank Regulation Change

Since 1977, the Community Reinvestment Act has required U.S. banks to meet the credit needs of people living in the areas where they do business — particularly those with low and moderate incomes. Banks are graded on how well they meet that mandate, and their track records matter when it comes to getting federal approval of changes such as a merger with another institution, or the opening of another branch.