EAST LANSING, Mich. - Option 1 Credit Union here has built a niche in making loans to people with disabilities, helping to boost its loan portfolio and its image in the community.
Partnering with United Cerebral Palsy of Michigan (UCPM), Option 1 offers the Michigan TeleWork Loan Fund and the Assistive Technology Loan Fund. Both are 100% government funded and are low-interest, fixed-rate products. The TeleWork Loan allows those with disabilities to purchase equipment to work from home or start a home-based business. The Assistive Technology Loan supports the purchase of devices like hearing aides, special eyewear, or a wheelchair ramp for a car, to help the disabled in their daily lives.
“You don’t see many banks offering these kinds of loans,” notes Adeline Metzler, executive director for the Center for Financial Health, a non-profit charitable organization run by the credit union that provides housing counseling. Option 1 is the only financial in the state offering loans for the disabled, she said. “In other states banks have been involved in this same program, but their fees are higher and some would not loan under $2,000. Well, sometimes a person doesn’t need that much.”
No Minimum Loan Amount, No Fees
Headquartered in Grand Rapids, Mich., $249-million Option 1 does not have a minimum loan amount for both products and does not charge fees. Terms range from 12 to 84 months, and rates from 4.5% to 7.5%, based on the length of the loan. TeleWork has a $20,000 limit and the Assistive Technology Loan a $30,000 maximum. The programs, the CU explained, are not money makers, “about a wash for the credit union,” said Metzler, who reminded the loans exist to support the community.
UCPM here is the conduit between the applicant and the credit union, taking loan applications at its Centers for Independent Living and reviewing them to make sure individuals qualify under federal guidelines. Applications are submitted to Option 1 for underwriting.
“We use our standard underwriting practices,” explained Diana Romsek, regional loan manager. “Then we submit a recommendation based on our assessment of the applicant.”
A volunteer UCPM board reviews the candidate’s application and the credit union’s recommendation and determines if the loan is funded. Once approved, Option 1 makes the individual a CU member and writes the loan. Individuals with disabilities living in Michigan are included in Option 1’s field of membership.
“We keep the loans on our books, and as the individuals make payments to us, that frees up additional funds for other applicants,” Romsek explained.
Option 1 makes more Assistive Technology loans–averaging between 35 to 60 per year. TeleWork loans are fewer, only 10 in the last five years, because of that loan’s criteria, Romsek said. Applicants must create and present a business plan.
Romsek said the TeleWork loan recently helped a disabled man who was working for a printing company start his own home-based business. “He applied for a $16,000 loan for a special type of printer. He’s now doing work for local businesses and schools.”
Option 1 also helped a man who restored bridges receive special equipment that allowed him to continue his work after he became injured on the job.
“Our job is to be the best stewards we can for the money,” Romsek said, “and in the process we make people happy.”
Seeing the smiles on the faces of those they help is rewarding, Metzler said. “The people appreciate it so much because not many financials make these kinds of loans. They say the credit union has made a big difference in their lives and they are grateful.”
“It’s about improving the lives of people with disabilities,” said Linda Potter, UCPM executive director. “For years your typical financial didn’t want to lend money for these types of things, partly because they felt applicants couldn’t pay them back. And they are wrong...Credit union support of these products says a great deal about the credit union industry.”(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
