General Enquiries: 020 7561 1786 or Email: info@credit-union.coop | CU Loan Repayment Issues Only: 020 3763 8397 or Email: loansupport@credit-union.coop

Our low cost loans could help your business

by lccu2020 | May 6, 2021 | news |

Our low cost loans could help your business

The pandemic has caused many of us to rethink our futures, either out of choice or necessity, and a growing number of people are starting their own business. Self-employment can be exciting, but finding the money to get things off the ground isn’t always easy. That’s where one of our low cost loans could help.

With the right ideas and support, self-employment can provide an escape from the regular nine to five routine, with the chance to be your own boss. However, starting a new business can be hard work and often involves a financial outlay to get the ball rolling, for things such as equipment, raw materials and a website, which can be a stumbling block for many people. One of our low cost Credit Union loans may be just the solution you need.

We offer loans of up to £25,000 above savings, starting from just 2.9% APR. You can apply for a loan as soon as you join the Credit Union, but often we will reward you with lower interest rates if you have saved with us first. Having saved with us also greatly increases the chances of your application being approved.

To apply for a low cost loan, you must first join the Credit Union as a member. When your low cost loan is approved and, if you are not already a member, you must open your account with a minimum £50 deposit to your savings account.

Credit Union Chief Executive Martin Groombridge said: “We’ve helped lots of people get their own business off the ground over the years and we’re always happy to consider new ventures. For example, we helped one member with a vehicle and other equipment, including a generator, when they set up their new catering business. So, if you’re thinking of starting your own business, why not contact us to see if we can help?”

The granting of a Credit Union loan is based solely on evidence of affordability and, unlike other lenders, we will not judge you if you have had financial problems nor will we encourage you to borrow more than you need or can afford.

To find out more about our loans and to apply online click here, and to join the Credit Union click here.

The Jeremy Hopgood Rooms, Caxton House, 129 St John's Way, Archway, London N19 3RQ
Tel: 020 7561 1786 (Multilingual advisers available)
Email: info@credit-union.coop

If you have a loan from us and need a little help managing repayments then
please call us on 0203 763 8397 to speak with one of our friendly Loan Support Officers who will find a way to help.

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How We Decide to Whether to Offer a Loan – The Basics

The Credit Union’s primary objective is to help members avoid or escape from debt by promoting a culture of saving. When we offer loans, we only do so if the borrower agrees to save a little while they repay. The establishment of a savings habit is proven to reduce the harms and risks of long-term borrowing becoming problem debt. Basically, when we get a loan application our decision is based on the following two principles:

1. Do we trust the applicant to repay the loan?

2. Can the applicant afford the loan repayment

This guide is designed to help members understand our thinking so you can best prepare if you should need to apply or re-apply for a loan.

1. Key Points in Our Assessing Trust of the Applicant

a) Has the applicant started saving? The money we lend is members savings so, especially at busy times, we have to give priority to loan applications from members who have made at least one savings payment. That first payment is good evidence that you are a real person and helps us confirm identity.

b) Proper Proof of ID & Address? What forms of proof of identity and address has the member provided? If you are able to connect your bank account through ‘open banking as art of the loan application process it a good way of proving ID. First time loans may be required to use online Open Banking.

c) Previous Borrowing History. Has the applicant borrowed and repaid us previously? Previous good repayment record supports any application.

d) Did the applicant inform us of other money owed? Failure to list all debts in the application process is likely to result in the loan application not being approved. It suggests that the applicant is either not in control of their money or not being completely honest with us and in either case we cannot put our members savings at risk by lending. Credit Reference Agency checks are used to show us what money is owed and to whom.

e) Is the member sensible with money? When we review the bank transactions of the loan applicant, we often see patterns of expenditure that suggest the applicant is not taking a sensible approach to expenditure. Changes in the way they manage their finances would suggest that the loan would not really be necessary. We want to help people be in control their finances and do not want to lend members savings to people who are not deemed sensible with the way they spend. This may be things like gambling, excessive shopping and/or eating out/takeaway food deliveries.

f) Always be ‘up front’ in your application. Honesty pays. We do not judge.

2. Key Points in Our Assessing Affordability for the Applicant

a) Is this loan in the member’s best interest? The value of the loan application in comparison with your income is a key measure of affordability. The loan interest members pay on loans pays our staff salaries, but we are not out to profit from you, rather we want members to borrow less over time and take control of their finances.

b) Positive Bank Balance at Month End? Is there money left in the members bank account at the end of the month that would be sufficient to cover the loan repayment if approved? If not, the member must explain how the loan would become affordable, for instance, by reducing expenditure in other areas.

c) Is the applicant struggling with existing debts? When we review the bank transactions of the applicant we can see income and expenditure. If the loan applicant tells us how the loan will clear other debts and reduce their expenditure this will help us understand affordability.

d) Is the purpose of the loan considered sensible? If the applicant is not paying essential bills such as mortgage or rent then a loan for a car or holiday is likely to be unwise and unaffordable.

e) Has the applicant fully explained why they need to borrow? Always feel free to email or call us explaining the circumstances that mean you need to borrow. The reasons for needing to borrow are complex, but being honest and explaining the circumstances can often help the ordinary humans on the Loans Team at the Credit Union to be able to assess trust and affordability. You briefly explaining your thinking about affordability gives us confidence that you are thinking sensibly about money, and sometimes allows us to suggest alternatives that may well be in your best interest.

f) Is the loan to clear other more expensive debts? Credit Reference Agency checks are used to show us what money is owed and to whom. If your loan application is to pay off other debts, stop and list every one of those debtors.Work out the cost of each. Consider clearing one or two at a time if its your first Credit Union loan. Pick them off one or two at a time, the most expensive first.

g) Has the applicant stopped to think about affordability? The ‘Your Money’ section of our website provides access to a budget planner which, if used and shared, gives us good evidence of affordability. Particularly helpful for loan applicants in financial stress. We hope this gives you an idea of how we decide yes or no to loan applications. The decision is by one or more other credit union members on our Loans Panel. We hope this helps you understand our thinking so you can best prepare if you should need to apply or re-apply for a loan.