More Funding, But Less Demand For CDCULoans
WASHINGTON - (11/30/04) -- Congress continues to provideincreased funding for NCUA's Community Development Revolving LoanFund, even though demand for the low-interest loans continues todwindle. This year's budget provides another $1 million for thefund. Since the fund's high-water mark in 2000, increasedcongressional funding has pushed the fund from $10.6 million tomore than $16 million, with all but $1 million of it reserved forloans and the remainder for technical assistance grants. Yet thenumber of loans outstanding has shrunk from 82 in 2000 to just 56last month. As a result, the fund had only $4.9 million in loansoutstanding at the end of October and almost two-thirds of itsavailable funding, $9.4 million, invested in U.S. Treasurysecurities. Cliff Northup, director of congressional and governmentaffairs for NCUA, said increased liquidity among credit unions andlow rates from other sources have contributed to the slack demandfor loans from the fund. "That's one of the reasons the last coupleof years we've asked Congress to reallocate more money for thetechnical assistance grants," he told The Credit Union Journal,noting that just $200,000 of this year's $1 million funding isallocated for loans.