Credit unions ready to beat the credit crunch
With banks and other financial institutions tightening their belts and invest ment harder to come by, there's another way to get your business off the ground.
As a result of the recent credit crunch, many high street banks have tightened up their lending criteria. Those considered a credit risk and refused bank loans, are finding it increasingly difficult to access affordable loans and set themselves up in business. In Leeds, Leeds City Credit Union and Sharing the Success (part of the government-funded Local Enterprise Growth Initiative) have joined forces to create a unique 'Enterprise Loan' package that is bucking the trend.
The 'Enterprise Loan' scheme, is unique to Leeds City Credit Union one of the largest Credit Unions in England and available to individuals living in the Leeds area. LCCU has never been busier with new loan applications, charging interest on a reducing balance meaning that consumers aren't faced with high front loaded interest charges. There's no set up fees and no penalties for early repayment of a loan.
Many of LCCU’s clients are trying to start up their own businesses, and this portion of the small business sector is feeling the crunch more than many. With LCCU and Sharing the Success's support, local enterprise culture can continue to thrive as people access the funding needed to launch new products or services, and take themselves off benefits.
Credit Unions are proving to be an ideal alternative; each loan application is considered on its own merit by a person and not by a computer. Quite often, a failed credit report may have been caused by past events, for example bereavement or redundancy.
Simon Brereton of Sharing the Success commented: "We believe this scheme will reduce a number of barriers faced by people with enterprising ideas; firstly they will get the finance they need but they will also receive support and guidance in the early stages of starting their business – often just as valuable as the loan. Things are tough in this current climate but we don't want lack of finance to be the reason someone doesn't fulfil their ambition of becoming their own boss."
Leeds City Credit Union is regulated by the FSA (Financial Services Authority) and fully subscribes to the Banking code. Due to the nature of a Credit Union, they do not borrow money from the Bank of England, this means that interest rates will not fluctuate and consumers will not be hit by increasing interest charges halfway through the repayment of a loan.
last updated: 14/07/2008 at 16:45