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Three credit unions have made referral agreements so they can provide their small loans to California business members through the Opportunity Fund, a Community Development Financial Institution based in San Jose, Calif.
The non-profit on Tuesday announced partnerships with Self-Help Federal Credit Union of Durham, N.C. ($1.5 billion in assets, 80,005 members), UMe Credit Union of Burbank, Calif. ($272.6 million, 15,789 members) and Meriwest Credit Union of San Jose, Calif. ($1.9 billion, 87,651 members).
The Opportunity Fund has made more than $500 million in small business loans since its founding in 1994. Out of 2,778 loans made in its fiscal year that ended June 30, 2020, 43% of owners were Hispanic, 21% were Asian and 8% were Black.
The average business had three employees.
Opportunity Fund supports working capital loans from $2,600 to $100,000 to underserved businesses. It says it offers flexible underwriting criteria, less onerous documentation requirements than other lenders and multilingual customer service representatives who are available 12 hours per day, 7 days a week.
The referral agreements are designed to allow the credit unions to help members meet their business needs for loans the credit union does not originate. In return, the credit unions earn a small fee, and retain the overall banking relationship while the Opportunity Fund services the loans.
"Helping people is at the heart of what we do at UMe Credit Union," said Anita Hutchinson, chief marketing officer. "Having a trusted partner in Opportunity Fund to refer our members to for small business loans that we don't offer in-branch ensures we meet our mission and keep happy members."
Opportunity Fund's website lists 27 organizations with partnerships. Only three of them are credit unions: Self-Help FCU, Comunidad Latina Federal Credit Union of Santa Ana, Calif. ($5.8 million, 1,360 members) and E-Central Credit Union of Pasadena, Calif. ($187.6 million, 13,137 members).
Sarah Brennan, SVP of southern California for Self-Help FCU, said the partnership helps the credit union create and protect economic opportunity.
"By collaborating with Opportunity Fund, we refer members for small business loans we don't offer in-branch," Brennan said, "ensuring that whether it's us or our trusted partner, Opportunity Fund, we can support entrepreneurs — especially entrepreneurs of color, women, and immigrant business owners — in making their dreams a reality."
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