BROOKLYN, N.Y. -
"Credit cards are used for small business financing and home improvements and all types of purchases. But you need to establish credit to get a credit card," she said. "Banks are not interested in small consumer loans like ours; our average loan is about $4,000."
The credit union serves low-income residents of Bushwick and Bedford-Stuyvesant areas of Brooklyn who have limited access to financial institutions, so establishing credit can be a challenge. Brooklyn Cooperative offers a "starter" loan with an amount of $400 that requires a $100 deposit in savings. If payments are made on time and the loan is repaid, members can graduate to additional loans at larger amounts.
"Our loan portfolio builds loyalty and a good reputation," Rajan said. "People who start out with a $400 loan now have $25,000 car loans. We will likely have their mortgages. We have the reputation that we consider giving loans to people from all backgrounds."
For a credit union with $6-million in assets, the number of products serves to impress. Mortgages are offered as well as commercial real estate and business loans up to $100,000. Consumer loans are made for medical bills, moving, and the first month of rent, and are made up to $10,000 at 14% APR.
The credit union is a community development credit union and receives grant money for operations, specific purposes and equity. Even with this assistance, the growth rate has been steady as shown above left.
