Low-income designation
Credit Union Low-Income Designation
Learn about the NCUA's Low-Income Designation (LID) and the benefits it could offer your credit union through CUCollaborate's definitive guide.
What Are the Benefits for Credit Unions?
Banks, Credit Unions, Loan Funds and Venture Capital Funds may all apply for CDFI Certification provided they meet certain eligibility requirements:After attaining the designation, a credit union is granted the following:
- An exemption from the statutory cap on member business lending, which expands access to capital for small businesses and helps credit unions to diversity portfolios;
- Eligibility for grants and low-interest loans from the Community Development Revolving Loan Fund;
- Ability to accept non-member deposits from any source; and
- Authority to obtain supplemental capital.
A community credit union with a LID has the further option of adding special field of membership authority in its charter to include “persons who participate in programs to alleviate poverty or distress” and “persons who participate in associations headquartered in the community.”
A low-income designated multiple common bond credit union with underserved areas in its field of membership may also apply this same authority and language to its underserved areas.
Additionally, any low-income credit union may contract a third-party for assistance not only with the chartering and designation process itself, but also related to management services going forward.
How to Maintain a LID
Once a LID is attained, a credit union must make certain it continues to meet the regulations moving forward.
Per NCUA regulations, the CURE will regularly monitor a credit union’s qualifying status to verify it still satisfies Low-Income Designation requirements. If an institution is found to no longer be compliant due to changes in its field of membership, it will be notified by the NCUA and then have five years from the time the notification was received to re-align itself with the criteria or face losing the designation. (During this time period, it should be noted, the LID remains in effect.)
Expand Beyond What You Thought Was Possible!
Our software platform ExpandCU has an additional feature only available to consulting clients, which considers billions of different expansion options to make sure your credit union chooses the best possible way to expand. As a result, we can identify field of membership options no one else can and that were previously thought to be impossible.
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