Credit Unions are mutual savings and loans institutions, owned by their members. There are almost 500 of those small institutions in the UK with around 1 million members. And they are set to expand.
New legislation introduced in February 2012 enables them to offer products in a way that is more directly comparable to high street lending and to open up their services to small businesses and community groups as well as to individuals.
Credit unions are not-for-profit. Any surpluses are shared between members. They are also protected by the UK Financial Services Compensation Scheme. So any savings are safe up to £85,000 per person, per institution. Interest rates are ‘fair and reasonable’, they are usually around 12.7% per annum (1% per month), but can be as low as 6% and there is a statutory maximum of 26.8% per annum (2% per month). Credit unions aim to instil good financial habits in their members, and in some cases you need to save for a few months before you can take out a loan or qualify for a lower rate of interest.
If ethical and responsible financial services are important to you, then maybe it’s time you checked-out a credit union. Those that lend to business seem to provide services that compare favourably to mainstream lenders and very much better than the payday lenders currently swamping advertising outlets and political donations. [Note: Payday lenders are banned from Prowess].
North London Credit Union (NLCU) is one of a growing number of Credit Unions offering services to startups and small businesses. Most of NLCU’s customer testimonials are from women. As they give some useful details of the holistic approach credit unions aim to provide, we’ve reproduced some of those case studies below:
I found the North London Credit Union extremely friendly and approachable. They gave me an on the spot answer there and then within the first half an hour of our meeting and the money was transferred into my bank account exactly when they said it would be. I had guidance and help with filling in the loan forms and I’m really pleased that we raised the finance for our next My Coffee Stop project, from a local and ethical company,this is very important to us. In addition, they run an excellent scheme that encourages you to save as you pay off your loan, which means you are building up a cash reserve buffer, for your business.
Karen Mercer www.mycoffeestop.co.uk
The North London Credit Union really was the only opportunity for me to cover the start up costs that I needed to take my business forward. Without the loan this would not have been achievable. I was very impressed at how professional and efficiently my application was dealt with and the speed at which I received my loan. Most importantly I felt that I was listened to throughout the process and that every effort was made to help me.
Sylvia Amoah, Angel-Craft
Contacts Find Your Credit Union website from the trade body ABCUL www.abcul.org or you can call on 0800 015 3060.