 | Stan Cowan
has worked in the financial industry for over eight years and is currently VP of marketing for Boeing Wichita Credit Union. His education includes a BBA and MBA from Wichita State University. He also teaches part-time for the Wichita branch of Baker University. Stan can be reached at (316) 651-5169 or scowan@bwcu.org |
Banking & Finance
2003-08-01 11:28:00
Low-income credit unions?
ANSWER: Low-income designated credit unions are a unique form of credit union. They serve primarily low-income members in distressed and financially underserved areas. In the past few years, NCUA (The National Credit Union Administration) has emphasized the benefits these institutions provide to the many people who are often unserved by traditional banking institutions. NCUA also manages a Revolving Loan Fund and provides technical assistance grants to low-income designated credit unions. The purpose of the revolving loan fund is to stimulate economic activities in the communities served by low income credit unions which will result in increased income, ownership and employment opportunities for low-wealth residents and other economic growth. The policy of NCUA is to revolve the loans to qualifying credit unions as often as practical in order to gain maximum impact on as many participating credit unions as possible. Loans are limited to a maximum amount of $300,000 per credit union. Loans issued between January 1, 1995, and December 31, 1998, carry a fixed interest rate of 3%; and loans issued after January 1, 1999, carry a fixed rate of 2%. Interest and principal are repaid on a semiannual basis beginning six months and one year, respectively, after the initial distribution of the loan. The maximum term of each loan is five years. Participating credit unions are required to match the value of the loan within one year of the date of approval of the loan. Currently, there are 949 low-income designated credit unions in the U.S., four of which are located in Kansas (one in Wichita).
