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Northwest Credit Unions Urged to Participate in New Emergency Loan Program
Last week, the Northwest Credit Union Foundation launched the new Emergency Loan Program, which combines philanthropic funds with credit union contributions, allowing dollars to get immediately into the hands of those who need help now.
NWCUF launched the program in the Yakima Valley, and soon plans to reach out to credit unions in southwest Idaho and southern Oregon, asking for their participation.
“Now is the time to help those in most need,” said Sharee Adkins, Executive Director of NWCUF. “Our members and communities have come to trust credit unions as the go-to partner in consumer financial health, and that has become especially true as families and Main Street are impacted by COVID-19. The Emergency Loan Program will be an important tool for credit unions looking to supporting their members and communities.”
For workers who are low-wage, traditionally underserved, and ITIN borrowers, finding emergency capital is especially difficult, as they are less likely to qualify for or access unemployment and federal relief dollars.
NWCUF received an initial contribution of $100,000 from a private philanthropic organization interested in helping people in Yakima, the Tri-Cities, and Wenatchee, with the intention of seeding further contributions from credit unions to grow the fund to $500,000 or more. The Foundation is convening donors and credit unions to leverage the initial contribution and others like it to launch loan funds across the region.
The Emergency Loan Program offers credit unions two options – contribute to an already-existing fund to increase lending power, and/or deploy emergency loans with loan loss support. NWCUF is seeking credit unions’ contributions as soon as possible so that the program may be offered immediately.
The program provides borrowers with a zero-percent, small-dollar loan with a 90-day deferred first payment and a 24-month repayment term. Through the loan program, NWCUF will maintain a loan loss reserve fund for credit unions to make reimbursements against for loan defaults. The fund has two risk categories: 75% loan loss coverage for high-risk borrowers and 25% for all other eligible loans.
“NWCUF is well positioned to leverage these dollars because of our strong network of credit unions. We encourage credit unions to reach out right away to get involved in the Emergency Loan Program, while the need is pressing,” Adkins said.