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Sep 05 2023

Bizfin – CUDA Credit Unions partner with Government in Ukraine Credit Guarantee Scheme

By News

Credit Unions support local businesses impacted by the economic consequences of the conflict in Ukraine by partnering with the Department of Enterprise, Trade and Employment (DETE) on the Ukraine Credit Guarantee Scheme

 

The Credit Union Development Association [CUDA], launched its Small Business Lending solution for credit unions to offer business loans to SMEs, ‘BizFin, Smart business finance, made simple’ in early 2021.

CUDA announced today that two of its large credit unions, Capital Credit Union and Credit Union Plus, with a combined membership of over 100,000, are now successfully partnering with Government in the low-cost Ukraine Credit Guarantee Scheme through BizFin. CUDA believes that credit unions will succeed in working with micro, small & medium sized businesses, adversely impacted by the conflict in Ukraine who are facing supply chain disruptions and increased input (including energy) costs.

Credit unions believe that SMEs have faced challenging trading conditions for over 3 years, which may have led to a sustained lack of investment, while necessary at the time, could have a detrimental impact on competitiveness.  The expectation is that as the economy gets back on its feet, lending should also grow.  Economic forecasts for the Irish economy remain positive [1]and lending will be required as part of SME’s capital investment strategy to fund expected growth.

The clear benefit for Credit Unions on partnering on a Credit Guarantee Scheme, is they are in receipt of an 80% Guarantee from the SBCI /or the Department of Enterprise, Trade and Employment, enabling them to offer competitively priced loans to their business members.

CUDA acknowledge that credit unions, who were again voted most trusted organisation in 2023 are more involved in their local communities, a consequence of which is more local businesspeople will be willing to sit down and discuss the merit of them participating in this scheme.

Kevin Johnson, CEO of CUDA commented, “

“As the trusted provider of financial services in communities throughout Ireland, we believe that many sole-traders and small business owners will feel more comfortable dealing with credit unions, particularly where they can receive a fast answer to their credit application. Many of these solid businesses are struggling due to high increase in costs, particularly energy costs and are now at a point where they need to review their working capital to ensure they are well positioned for the future.

We have designed the standalone business website, Bizfin.ie, to support this initiative which will be accessible to all business customers of the participating credit unions. They will be able to apply for business loans as well as apply for credit union membership via this site.”

Ends

  

About Ukraine Credit Guarantee Scheme

The Ukraine Credit Guarantee Scheme is offered by the Department of Enterprise, Trade and Employment to provide viable SMEs, including primary producers, impacted by economic challenges arising from the conflict in Ukraine with access to low-cost finance.

The scheme supports economic activity in Ireland, facilitating the provision of working capital and medium-term investment finance to businesses adversely impacted by the conflict in Ukraine who are facing supply chain disruptions and increased input (including energy) costs.

Borrowers will contribute to the cost of the scheme by paying a risk premium on the credit advanced. This premium will be incorporated into the margin on the loan, collected by the on-lender and paid to Government of Ireland.

 Loan Features

  • Loans from €10,000 to a maximum of €1,000,000 / €400,000 for BizFin Credit Unions, per borrower (subject to Loan Amount Criteria, see below for further details)
  • Repayment terms of between 3 months up to 6 years
  • Eligible financial products: term loan facilities.
  • Loan amounts less than €250,000 will be unsecured.
  • Amounts greater than €250,000 may be secured; however, a personal guarantee may only be sought in circumstances where it is required to capture supporting security, or where it is an uncollateralised personal guarantee and is limited to a maximum of 20% of the initial finance agreement amount.
  • Up to 90 days interest and/or capital moratoria are possible under the scheme. These remain at the discretion of the participating on-lender.
  • Loans will be available up to the 31 December 2024 or until the scheme has been fully subscribed.

 Eligibility Criteria

Borrowers must self-declare that:

  • Their costs have increased by a minimum of 10% on their 2020 cost figures due to the impact of the conflict in Ukraine.
  • Finance is being sought specifically as a result of difficulties being experienced due to the conflict in Ukraine and meet the specific criteria as set out in the Loan Purposes section.
  • Finance is being sought for a new loan. Refinancing of existing loans is not

How to apply

Step 1 – Applicants must first register on the SBCI Hub and submit an online Eligibility Application Form to check if they can access the scheme. Once the online form is completed, successful applicants will be issued with an eligibility code.

Step 2 – The applicant must provide this eligibility code to the Credit Union to begin their credit application process.

Please note that the SBCI eligibility code is not a guarantee of credit approval.

 

About BizFin

This Business & Community Lending solution is an initiative that commenced in participating credit unions in 2021. These credit unions have a strong desire to serve other sectors of the credit union   membership, namely micro, small & medium sized enterprises, and community clubs & associations.

Our strategy is to deliver prudent high quality lending growth within our catchment area, by offering secured and unsecured longer-term lending.

This is achieved by having the necessary in-house expertise & staff, coupled with the close collaboration of contributing credit unions.

In BizFin we have developed a uniform & consistent approach, so that every applicant will have the same transparent, professional & personal experience in every participating credit union.

If you would like to know more about a business or community loan, including the Ukraine Credit Guarantee Scheme, visit BizFin.ie.

 

[1] European Commission Economic Forecast for Ireland May 2023[/vc_column_text][/vc_column][/vc_row]

Dec 21 2022

CUDA welcomes the New Minister of State with responsibility for Financial Services, Credit Unions and Insurance

By News, Uncategorized

Credit unions have welcomed the appointment of Jennifer Carroll MacNeill as the new Minister of State at the Department of Finance with responsibility for Financial Services, Credit Unions and Insurance.

Commenting on the appointment, Kevin Johnson, CEO of CUDA,

“We welcome the appointment of Minister Carroll MacNeill at this key time for credit unions.  We look forward to working closely with the new Minister on the Credit Union (Amendment) Bill 2022 as it progresses though the stages to enactment.  For many years credit unions have operated within outdated legislation – legislation that is not fit for purpose in this modern era. It is so important now that we ensure the final drafting is appropriate to avail of this unique opportunity that will facilitate credit unions to offer and deliver more products and services to existing and future credit union members.  At a time when our society faces many challenges, this critical element of the Programme for Government will undoubtedly contribute to strengthening the standard of living for so many people, both at local and national level ”

Nov 30 2022

Credit Union Development Association (CUDA) delighted to see publication of the Credit Union (Amendment) Bill 2022

By News

Over many years credit unions have operated within outdated legislation – legislation not fit for purpose in a modern era. For some time now, CUDA has called on the Government to introduce enhancements to the existing credit union legislation to ensure credit unions can reach their potential on behalf of their members.

Today, the Government has published a new Credit Union (Amendment) Bill. On behalf of its members and the credit union sector at large, CUDA welcomes this development. According to Kevin Johnson, CEO CUDA, “this unique opportunity will enable credit unions to offer and deliver more benefits through enhanced products and services to existing and future credit union members”.

Credit Union legislation was last overhauled 10 years ago by the Credit Union and Co-operation with Overseas Regulators Act 2012.

The published amendments will allow greater collaboration and choice when developing credit products and offerings to consumers such as sharing large community project loans amongst a number of credit union participants (“loan sharing” or “loan participation”), and the ability to offer a full range of services to consumers, irrespective of the fact that a credit union may not have that product themselves e.g. mortgages, by introducing the member to a colleague credit union that does offer the product or service (“loan introduction”).  These are standard practices amongst credit unions in other jurisdictions such as Canada.

CUDA particularly welcomes the changes that recognise the great work of volunteer directors, who provide a professional service pro bono. The changes will allow them to focus more on the overarching governance and strategic direction and policy making of the credit union, while allowing a credit union assign new roles, focusing on implementation and operations, to its professional management team.

There is no doubting the trust members place in their credit union. The relationship is unique. CUDA is pleased that the legislative changes will allow credit unions continue their special relationship with members and the community through environmentally friendly methods – including the introduction of digital enhancements to their existing services and facilitating additional loans to the community. However, CUDA is quick to note that credit unions are very aware of the importance of face-to-face interactions with their members. Something that is greatly diminishing in other areas of the banking.

CUDA commends the great work achieved by all stakeholders, noting that the process started out with interested parties having differing views and priorities. The pandemic brought an additional layer of complications. CUDA says that the published Bill is an example of what can be achieved through meaningful cooperation.  CUDA would like to take the opportunity to express its appreciation for the productive contributions of Minister of State, Séan Fleming TD, Minister for Finance, Pascal Donohoe TD, the team at the Department of Finance led by Brian Corr, the Registrar of Credit Unions, Elaine Byrne, and her team at the Central Bank, and our colleagues in CUMA, ILCU and NSF.

CUDA looks forward to the speedy implementation of the legislation to ensure credit unions can continue to deliver their first-rate service – ensuring the best outcomes for credit union members, their communities and the wider Irish economy.

Nov 30 2022

CUDA issues cautious welcome to the publication of the Retail Banking Review

By News

Speaking following the publication of the Report, Kevin Johnson, CEO of CUDA, stated that the Review has a welcomed focus on the interests of financial services customers and their communities, but we will need to see detail, such as the definition of terms like ‘reasonable access’, to determine how practical these proposals are.

It is good to see the recognition of credit unions as key players in providing real competition and value to retail consumers of financial services. However, a lot more detail and action is required to ensure the potential that credit unions have becomes a reality. The Credit Union (Amendment) Bill 2022, which is about to be published, needs to be enacted straightaway to facilitate credit union services to be delivered consistently across the country.

The Report sets out recommendations that will reduce the ability of providers of banking services to solely decide who should have services and who shouldn’t. We welcome this as current practice is not consistent with supporting the financial wellbeing of all in our society, and credit unions will continue to lead the way in ensuring that the interest of their consumers is the priority and hopefully others will follow that example.

It is also disturbing that a recommendation is needed requiring providers of retail banking products and services to set out and publish customer charters.

In a sector wide submission to the Credit Union Policy Review February 2021, we recognised the need for a long-term vision that is reflective of the unique role of credit unions and how they will improve the financial, social and environmental well-being of credit union members and their communities. It is encouraging that the Review Team state in this report their understanding that the Department of Finance and the Central Bank will engage constructively, developing new legislation, if required. Hopefully this will also extend to enhancements to credit union regulations.

CUDA looks forward to continuing to constructively work with all the members of the Credit Union Stakeholder Group to continue to improve the customer experience and value proposition that people can get from their credit union.

Sep 25 2022

Credit Union (Amendment) Bill a priority in Government Legislation Programme

By News

The Government Legislation Programme was published on 14th September and sets out the agenda of new legislation for this Autumn Session 2022. CUDA is delighted to note that the priority legislation for drafting and publication during this session includes the Credit Union (Amendment) Bill. This will give effect to the proposals that have emerged from the Review of Policy Framework of Credit Unions. It is ten years since credit union legislation was amended.

At a time when there is a significant housing challenge, a climate change crisis, a looming pension crisis and large-scale bank branch closures Government cannot solve these alone. CUDA believes that there is a real fit between key elements of Government priorities and the future role of Credit Unions.

Credit unions have the funds and the market reach – our unique ownership model means benefits flow back to Members and Communities. The new proposals will facilitate real collaboration occur between credit unions. Each credit union is a separate legal entity with its own board and management team, and up to now they are not permitted share business. These changes will permit credit unions to collaborate to introduce loans to each other and collectively share loans. They will be able to establish a credit union for credit unions and have greater opportunity to invest in credit union owned service organisations. These changes will help Credit unions make a greater financial, social and environmental contribution as their legislation framework is modernised.

Allowing credit unions to do more business through these changes, this could effectively see their lending double increasing from €5.5bn to over €10bn.

We will also welcome guidance from the Minister of State at the Department of Finance on how credit unions can qualify to become distributors of State Savings products as this would be an opportunity to broaden the savings options that credit unions can offer.

We look forward to continuing contributing to the good work that is ongoing and would ask all members of the Oireachtas to support and enact these overdue changes. To bring all this good work into existence we need the Central Bank to ensure that they implement regulations that will enable the changes to the credit union law that then enables them to get on with delivering real competition and choice for people throughout Ireland.