Why You Want a Low-Income Designation from NCUA (And How to Get It)
in League Initiatives
By: David Frankil, NJCUL President/CEO

The conclusion of nearly every article about the benefits of credit union membership is that you can join a credit union, and you should do it as soon as possible.

I’m telling you the same thing about the low-income designation (LID) from NCUA—if you meet the criteria, you should work through the process as soon as you can. A federal credit union qualifies for LID when a majority of its membership (50% + one member) qualifies as low-income. It’s as simple as that. 

NCUA sees credit unions that serve predominately low-income communities as facing unique challenges. They are often required to provide labor intensive products and services, and providing those services to low-income individuals in many cases may be more expensive.

NCUA provides special benefits and even some regulatory relief to LID-designated credit unions. Maybe not so much of a surprise, but NCUA reports that the nearly one-third of all credit unions currently designated as LIDs experience higher loan growth than other FCUs. 

Benefits of LID include:

  • Eligible for NCUA grants
  • Eligible for low interest loans through the NCUA’s Community Development Revolving Loan Fund
  • Receive consulting services from NCUAs Office of Small Credit Union Initiatives (OSCUI)
  • Can accept non-member deposits from any source. 
  • Can raise supplemental capital that counts as net worth
  • Receive an exemption from the aggregate loan limit for member business loans (MBLs).
  • Access grants and other assistance from other federal government agencies and non-profits
  • And more

The process of applying can be challenging, though—which is why the first in our series of free, live, monthly, members-only compliance Webinars in January is “How to Apply for a Low-Income Designation (LID).” Specific topics that will be addressed are:

  • An understanding of how to apply for the Low-Income Designation
  • An understanding of what it means to be Low-Income Designated
  • Benefits of obtaining Low-Income Designation
  • Credit union best practices

The free Webinar will be held on Thursday, January 12, 2017, from 10 a.m. to 11 a.m. ET. For more information and to register, go to http://www.cvent.com/d/mvq4n6

If you have any questions, please contact Nicola Foggie, NJCUL Vice President of Compliance and Regulatory Affairs, at nfoggie@njcul.org or 800 792-8861 ext. 112.