As mentioned in my blog on 16th June, I informed you that I would be posting a fortnightly blog to encourage debate on topics which affect credit unions and our members. This blog is going to focus on Small Business Loans with your local credit union.
Small businesses throughout Ireland have been hit hard in the recession. Here we look at one of the schemes credit unions have set up to support the growth and sustainability of small businesses in their community.
According to a survey conducted amongst clients and contacts of the County and City Enterprise Boards (CEB) last January, 43% of businesses feel credit has worsened in the last six months.
In response to this, Dundrum Credit Union in partnership with Dun Laoghaire Rathdown CEB, developed a new Small Business Loan Scheme with a loan rate of 5.95% (6.11% APR).
Members of the credit union can apply for a Business Loan. They must be living, working or operating a business within the Dundrum Credit Union catchment area. They are then eligible to apply for a loan up to a maximum of €40,000, with a repayment period of up to 5 years. The CEB appoint a mentor to all successful loan applications to assist with business planning and development, as well as management capability.
Gerry McConville, Manager from Dundrum Credit Union told me that, ‘The scheme is aimed at the self employed and micro enterprises. We expect demand will primarily come from early phase applicants who are less than 18 months in business but we also expect interest from existing enterprises which require access to credit in these difficult times’.
All applicants must complete a loan application from the credit union and submit a basic business plan with 3 year cash-flow projections. Existing businesses must also submit a copy of their latest set of audited accounts and bank statements. Applications are reviewed by the Evaluation Committee of Dun Laoghaire Rathdown CEB. The committee make recommendations for loan approval to the credit union, who ultimately decides which applications are successful.
This new small business loan scheme is a wonderful response from two key organisations, coming together for the betterment of businesses in local communities.
As mentioned above, this is only one example of how credit unions are supporting small businesses in their community, there are a number of other similar schemes around the country.