A community development credit union provides financial services to people from low-income areas. Banks don't like to give loans to lower income consumers because the loans are too small to make it worthwhile. Community credit unions, on the other hand, do give out small loans at good interest rates, allowing low-income business owners to improve their stores and invest in business equipment. Mortgages, checking accounts and other individual services are provided too.

A community development federal credit union refers to credit unions that are federally chartered and backed by the reserves of the US government. The National Federation of Community Development Credit Unions is a non-profit agency certified by a department within the Treasury, that advocates for community credit unions. All community credit unions are based on providing services that serve to encourage community economic development for low-income areas.

1. There are 230 credit unions for low income areas that are covered by the National Federation of Community Development Credit Unions.

2. Community credit unions provide services that banks would not provide to people in low income areas.

3. Community credit unions are individual to the community and so do not all provide the same services.

Action Steps
The best contacts and resources to help you get it done

Get the skinny on community development and credit unions

Credit unions are cooperative financial institutions that provide many of the same services as banks. They serve a distinct purpose in that they are owned by the people who use them. They usually provide financial services at lower costs than commercial banks.

I recommend: NCUA gives a good rundown on credit unions and their services. The National Federation of Community Development Credit Unions, a non-profit organization that promotes and advocates on behalf of the interests of community development credit unions, is a great resource. It provides a state-by-state listing of community credit unions in its organization.

Get a sense of what community development and credit unions can provide

A community federal credit union can provide different services in different locations. Credit unions for community development can get people started in financial savings plans, mortgages and checking accounts. Some credit unions provide community-oriented services, too.

I recommend: Hope Community Credit Union serves three southern states and provides individual business banking services. It partners with another non-profit organization to provide financial services in areas that are distressed. It also has a literacy program. Santa Cruz Community Credit Union out of California provides financial services to individuals and businesses. It also provides child care and financial literacy programs.

Get a small business loan from a community federal credit union

If you have the qualifications, getting a loan from credit unions for financially under-served areas can give you good rates and other services at lower costs.

I recommend: Alternatives Federal Credit Union serves areas in upstate New York. Some of its business offerings include women and minority-owned business loans, lines of credit, microloans and much more. ASI Federal Credit Union works out of Louisiana and provides small business services in the nature of loans, employee direct deposit, wiring services and such.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Be prepared for a mountain of paperwork when applying for a loan or mortgage from community credit unions. This has to do with making sure that you can afford payments and also that they can give you the best rates and programs for your needs.