PORTSMOUTH, N.H. – High heating costs, bad weather early in the season and press coverage about the crunch contributed to Service Credit Union funding 37 Community Emergency loans this past winter, said Karen Benedetti, Vice President, Marketing. The $1 billion Service has been offering the loan since November 2003, but up until this fall, had only funded 29 loans total the first two years.
"On the East Coast, there was a lot of press about the high cost of heating, and rightly so, because many people had huge bills they weren't prepared for," Benedetti said.
The program was born out of the New Hampshire Credit Union League, when the league created a $35 million community outreach initiative in 2003, funded by member credit unions, for the purpose of making nonconforming real estate loans and small emergency loans. According to NHCUL Senior Vice President Rob Kimmett, credit unions are allowed to create their own specific underwriting, with the league providing only a general framework from which to build. The flexibility has allowed credit unions to find creative solutions to local problems, Kimmett said, mentioning one member credit union in "the north country" who extends cord wood loans to members who use wood to heat homes, a common practice in the area.
Recommended For You
Service Credit Union only makes loans to members who have been referred by social service agencies, which Kimmett called "certainly the best model." Both Benedetti and Kimmett agreed that the social agency involvement, along with a low dollar amount – Service's maximum loan amount is only $1,000 – help keep the credit union in good favor with regulators. "There is no standard underwriting done on the loan; rather, if the individual is referred from the agency and it's a legitimate heating bill, the loan is approved. The agency uses judgment too, by selecting and referring people who are on a positive path," Benedetti said.
Loan amounts typically vary from $500 to $1,000, and are assigned a 9.9% APR fixed rate, with a 12-month maximum term. Loan checks are made out directly to the creditor, not the member. Members who aren't referred by an agency and request the loan are subject to credit approval and standard signature loan underwriting standards, she added.
The credit union doesn't make a profit on the loans, because the low loan amounts are offset by a higher loss ratio. Benedetti declined to specify, but called the loss ratio "not exceedingly high, but higher than other products."
"Overall, we don't consider it something we're looking to make a profit on; instead, it's really just to help members with much needed assistance during a challenging period, and we're aware of the financial implications of that," Benedetti said.
Benedetti said that the total dollar amount of the loan program is so small compared to the total loan portfolio, there's no risk to the credit union's bottom line. For example, if all 37 loans failed, and each loan was funded at the maximum $1,000, the highly improbable loss would be comparable to a bad auto loan or two.
"We've helped 37 families this winter, and regardless of what happens with those loans, we've made a positive impact on our community," Benedetti said.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
