Awards have been designed to provide funding for credit unions' reserves and capital activities. This will allow them to increase the size of their loan book, make higher value and longer term loans, increase their membership and savings deposits to drive income and thereby improve the sustainability of their credit union.
This sort of sustainable growth is designed to help credit unions reduce their reliance on short-term, external revenue grant funding and to maintain and grow their ability to help those people who are disadvantaged by providing access to appropriate savings products and affordable credit.
Two kinds of grants will be available:
a) Large awards (of between £50,000 and £100,000) which will:
- ‘top-up’ a credit union’s reserves and provide the opportunity for them to build their business to ensure sustained growth without capital constraints. Note that these are not revenue grants, so must be accounted for as capital and shown on the balance sheet appropriately
- Capital activities that would enable a credit union to purchase an asset of equivalent value such as premises, a vehicle or computer equipment. Applications will need to demonstrate how the capital asset will support the growth and development of the credit union.
b) Seed funding awards (of up to £20,000). There will be a very small number of these awards, totalling less than 10% of the total fund, either for:
- Credit unions that are able to demonstrate good strategic planning and ambitions for growth but need to make a step change in their operations to do so
- for assisting with the costs of a merger that is agreed in principle where the newly created credit union will be anticipating sustained growth and serving a wider community than was previously possible. The grant may be used towards the legal, governance or other professional advisor costs that are required to ensure a satisfactory merger goes ahead.
Available for download on the right hand of the screen is the Lloyds Banking Group ‘Supporting credit unions’ brochure.The brochure shows the support Lloyds Banking Group has given credit unions in the past 5 years and the impact they have made in the sector.
As part of its commitment to Helping Britain Prosper, Lloyds Banking Group aims to tackle social disadvantage and improve people’s lives for the better. One way it is doing this is by supporting the growth and profile of the credit union sector in the UK through the Lloyds Banking Group Credit Union Development Fund. From 2014-2018, the Group has made a £5 million commitment to the Fund to help credit unions with strong proposals for sustainability and growth to invest in resources or improve their capital reserves.
The fund has been delivered in partnership with the Credit Union Foundation and has helped enable £5million per year additional sustainable lending by credit unions to their customers across the UK.