ALEXANDRIA, Va. – NCUA reported this morning its $18 million Community Development Revolving Loan Fund did not make a single loan in the first quarter of the year and has not made any loans for two years, even as the agency has taken several steps to prime the lending pump.
The dearth in demand has left the CDCU fund with just $2.3 million in loans outstanding and $15.5 million in available loan funding at the low rate of 1%. The majority of the funds, $10 million, are sitting in U.S. Treasuries and $5.5 million of it is in cash.
The slack demand comes amid a growing number of funding sources for CDCUs, including the Treasury Department's Community Development Financial Institutions program and the Troubled Asset Relief Program, which provided funding for 48 CDCUs, many of them the same credit unions that have borrowed from the NCUA fund in the past.
Demand for the low-interest CDCU loans, funded by congressional appropriations, peaked in 2007 when there were 95 loans outstanding for a total of $13.3 million.
The slack demand comes even as NCUA is seeking to revive lending at the fund by expanding the number of credit unions eligible for the funds from the current 1,500; allowing NCUA to charge interest of less than the current 1%; awarding loans greater than the current $300,000 limit, and using the unexpended funds for emergency lending to eligible credit unions.
Even as the lending dries up, the NCUA fund plans to make a total of $1.3 million in small grants up to $25,000 to eligible low income credit unions.
