A credit union that will offer an option to people who sometimes get caught in the payday loan trap and a banking alternative to others will open this summer in downtown Lincoln.
Community HOPE Federal Credit Union has been issued its certificate of charter and will begin serving the downtown area in August, from offices in the 1600 block of N Street, said Mark Koller, who helped start the low-income credit union and will be its CEO.
The credit union will serve about 40,000 people who live, work and worship in the 12 census tracts that make up the downtown area.
It will also serve people who seek relief from poverty. So if someone who lives in the Bethany area is using services at the Center for People in Need, they would be eligible to be a member, Koller said.
“That increases our footprint,” he said.
“Our mission is to give an alternative to payday lending, as well as financial literacy training. So when the credit union lends out money, we will also educate you so you don’t fall into that trap again,” he said.
“Most traditional lending by banks and credit unions is based on collateral and capital. We are going to be focusing on character,” Koller said.
The Community HOPE rules will be more flexible than traditional banks. For example, the credit union may make a $500 loan and stretch the payment out over 12 months, he said.
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A bank has shareholders and has to meet a dividend payment. A credit union has members, “and we help each other,” he said.
The federal charter means deposits up to $250,000 are insured and the community low-income designation means the credit union is eligible for grants and low-interest rate loans, he said.
Money for the credit union came from several foundations, including the Cooper Foundation; the Woods Charitable Fund Inc.; the Lincoln Community Foundation on behalf of the James Hines Endowment Fund; the Lincoln Public Schools Employees Federal Credit Union; Building Strong Families Fund; the Peter Kiewit Foundation; and the Sherwood Foundation, according to Koller.
The credit union will offer auto loans, money orders, cashier checks, wire transfers, regular shares, share drafts, short-term unsecured loans and share-secured loans, as well as financial literacy training programs, according to a news release.
The low-income designation makes Community HOPE eligible for certain benefits, including National Credit Union Administration grants and low-interest loans as well as an exemption from the member-business lending loan limit so it can better serve low-income members in the community.
Koller has been working on the low-income credit union proposal for more than four years. The application for the federal charter was a 17-step process that took quite a bit of time to get through, he said.
And it is rare to get a charter with the new federal limitations under the Dodd-Frank financial reform act. This is the only one issued by the National Credit Union Administration so far in 2017, he said.