Call us today to learn more about how a low income designation can benefit your credit union at (202) 831-2500

Nonmember Deposits

Receive Insured Shares from Outside Your Membership

Low-income designated credit unions (LICUs) can obtain shares from any nonmember, enabling them to build assets with funds from sources outside their limited field of membership. These nonmember shares are insured the same as member shares, and limits have been raised to either $3 million or 50% of total shares, whichever is greater. These opportunities are not available to most credit unions, which can only receive insured shares from members, government entities, or other credit unions. 

Secondary Capital

Increase Net Worth with Secondary Capital

Low-income designated federal credit unions can take on subordinated, uninsured debt in the form of secondary capital accounts. This secondary capital counts towards statutory requirements, and can be used to support growth.

In order to receive secondary capital, credit unions must submit a plan to NCUA detailing:

  • How the capital will be used in a way that supports the credit union's business plan
  • How the credit union plans to repay the capital
  • How much secondary capital the credit union plans to accept

Member Business Lending Cap Exemption

Offer more Loans to Member Businesses

Most federally insured credit unions face a cap on how much they can lend to member businesses. This cap is equal to either 1.75 actual net worth or 12.25% of total assets, whichever is lower. Low income credit unions are exempted from this restriction, granting them unrestricted ability to offer commercial loans, as long as they comply with all other aspects of NCUA's member business loan rule.

 

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Loan & Grant Opportunities

Access the Community Development Revolving Loan Fund

Federal credit unions, and most federally insured state credit unions, with a low-income designation are eligible to apply for loans and grants from the Community Development Revolving Loan Fund (CDRLF). CDRLF is a program administered by NCUA for the purpose of assisting LICUs in meeting the financial service needs of their members. The amount available through CDRLF varies based on congressional approval, but in 2019 $3.9 million in loans and $2 million in grants are expected to be offered through this program.

Special Field of Membership Rules

Reach a Wider Field of Membership

Low-income designated federal credit unions (LI FCU) with a multiple common bond charter can add associations to their field of membership that have the sole purpose of making people eligible to become members. The only restriction is that these new members must all meet the definition of low-income. For LI FCUs with a community charter, it is possible to expand field of membership to include any participants in programs headquartered in the community or intended to alleviate poverty or distress

CDFI Application Assistance

Streamline Your Application for CDFI Certification

The Community Development Financial Institution Fund offers grants to financial institutions that serve low-income communities. In 2017, 56 credit unions with a CDFI certification received $39.5 million in awards from this fund. The CDFI certification is different from a low-income designation, but low-income designated credit unions get NCUA assistance in applying for certification, as well as a simpler application process.  

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How to Qualify

Determining if you Qualify for a Low-Income Designation is Easy

In order to qualify for a low-income designation, more than 50% of a credit union's members must be low-income. A low-income member is defined as:

  • one whose median family income is 80% or less than the median family income for the metropolitan area in which they live or the national metropolitan area, whichever is greater, or
  • an individual who earns 80% or less than the median earnings for individuals for the metropolitan area where they live or the national metropolitan area, whichever is greater.
The NCUA determines whether a credit union qualifies by making assumptions about members' income based on where they live. By being strategic in obtaining a low-income designation, credit unions can unlock valuable benefits without having to change their business.

Need Help Qualifying?

Contact us if you have additional questions or need help attaining or retaining a low income designation.

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