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How do you start a credit union

how do you start a credit union

Step 1

Organise a committee to establish a credit union. Individuals do not all need financial experience, but a financial background will help in establishing the credit union.

Step 2

Settle upon the common bond for membership. Credit unions are limited in the type of customers they can seek. A "common bond" grew out of early credit unions being based around the communities that could monitor member financial responsibility. A common bond is required for a charter and can be based on location, place of employment or industry, religious community or other associations.

Step 3

Survey potential credit union members. Establish if there is enough interest in the common bond group to establish a credit union. Learn the financial needs of the membership and use that as a guide for establishing

the union.

Step 4

Decide whether to seek a charter as a basic or full service credit union. Basic service credit unions provide savings and current accounts and small consumer loans. Most new credit unions are chartered as basic credit unions because of lower start-up costs and the lesser financial experience of management. Full-service credit unions require a more developed business plan and experienced management. They can include advanced services like business loans, check cashing and retirement accounts.

Step 5

Contact the National Small Credit Union Program. The program, part of the NCUA, provides direct assistance to those starting credit unions and those serving low-income people. The NCUA can provide technical assistance, best practices standards and training assistance. The program will put the credit union in contact with a local examiner.

Category: Credit

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