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Community Development Revolving Loan Program for Credit Unions

Published on AidPage by IDILOGIC on Jun 24, 2005

Possible uses and use restrictions...

In order to meet the objectives of the Community Development Revolving Loan Program for Credit Unions, an applicant low-income credit union approved for participation must provide a variety of financial and related services designed to meet the particular needs of the low-income community served. Federal funds loaned under the Revolving Loan Program may be used for services that include activities aimed towards: (1) Supporting and stimulating economic development and revitalization efforts aimed at benefiting the community it serves. Recipients are encouraged to use funds available through the Revolving Loan Program to serve as a catalyst to attract and stimulate the investment of capital from other private and public sources to promote economic development activities within the community; (2) providing member services such as financial counseling; and (3) increasing the membership and the capitalization base such as: (a) membership drives; (b) campaigns to encourage members to increase their share deposits through systematic savings, utilizing such methods as payroll deductions allotments; and (c) businesses and other organizations serving the community to maintain share deposits or contribute financially in other ways to projects supported by the credit union. Loans up to $300,000, will be made to credit unions. All loans must be repaid to the Community Development Revolving Loan Fund for Credit Unions within the shortest time compatible with sound business practice and with the objectives of the program, but in no case will the term exceed 5 years. Loans made under this program shall bear interest at a rate of not less than 1 or greater than 3 percent per annum. Semi- annual interest and principal payments are required by the Revolving Loan Program.