Community Partnership Lending® is an exciting program that has the potential to help low-income individuals, enhance networking and strengthen community resources.
As welfare reform threatens many of our community's low-income families, credit — not charity — may provide a way out of poverty for some.
Alternatives Credit Union has an exciting loan program that, in partnership with non-profit organizations, will give loans to clients of non-profits that might otherwise be considered "unbankable." In Bangladesh, the Grameen Bank makes very small loans to severely impoverished people. Those loans often result in increased incomes for families. Revolving loans and peer lending programs in industrialized countries have given people the means to start their own businesses and move up from poverty.
Here's how it works:
- The non-profit organization raises funds to support loans.
- The funds are deposited with Alternatives, and Alternatives agrees to fund loans to a maximum of double the funds on deposit. (For example, if your organization raises $5,000 we'll lend $10,000; if you raise $30,000, we'll lend $60,000).
- The non-profit organization decides on loan policy (that Alternatives can help with) and makes the loan decisions.
- Alternatives gives out the loans approved by the non-profit organization and services the loans (loan fund management such as collecting payments and tracking history, reporting, collection).
- If a loan is not repaid, the non-profit organization's deposit account is charged for the loan balance.
The benefits of this partnership are:
- Since the non-profit weighs the factors to decide who should get a loan, the loans can be specific to the group's needs.
- When the organization seeks funding, the offer that Alternatives will double the money will be an attractive consideration to funders since Alternatives will, in essence, be matching funds.
- Doubling the non-profit organization's funds means together we can reach more people.
- Alternatives' servicing the loans eases the administrative burden for the non-profit organization.
- The non-profit organization owns the risk pool and can withdraw funds not guaranteeing loans.