In the last article we talked about how a Credit Union can save a lot of people from loan sharks. If you want to do a community service, think about starting a Credit Union. Yes; you can do that. In this article we will discuss basics of starting a credit union. If you need more information, write a comment or contact http://www.abcul.org/
A lot of activities run concurrently in the process of setting up a credit union. To start the process, register the Credit Union with the FSA. You would also need to develop a group or community with the required experiences and skills to manage and run the union. Some of the basic requirements are knowledge or experience of business process, marketing, finance, HR and IT.
You also need to make sure that the members are committed enough and have enough time to volunteer. It is also important to carry out a ‘Pledge Drive’ to understand and identify the primary demands of the proposed community. This will also help you to develop a business model.
Setting up and running a credit union may seem an expensive process. The cost of operation, office setup, staff etcetera may vary between £30,000 and £70,000 for the initial 3 years. Thus you need to secure sponsorships from sources like employers, business groups, housing associations etcetera.
The credit union involves different stages of development. It is a little difficult to put these different stages in a specific order. However the following can help you get the basic idea.
- You need to decide on the communities or group you would like to include in the common bonds.
- A group of skilled and experienced people to develop a successful union.
- Run a pledge drive and develop a business plan projection
- Get your business plan, procedures and policies approved by FSA.
- Look for funds and donations to run the Credit Union
- Hire employees to run the credit union. The employees must have Approved Persons Status from the FSA and well trained to run it smoothly.
- Promote your credit union to get new members and to meet the business goal.
It needs a lot of effort to set up a credit union. It will take months to submit your application to the FSA for a review. You also need to convince them that you have the best team and competence to run a union. Nevertheless, before you start with the process make sure to visit the website of ABCUL and FSA. Joining the ABCUL will help you to get the extensive information on the process and services. The membership fees are £50 a year.
Lately many credit unions are merging to develop a sustainable and stronger union. They are extending their ‘common bonds’ so that more people can benefit from the credit unions. FSA also supports this move.
Thanks for the article. But is it just a social service? Or can it be a business option for people who started it…
Our community needs this kind of advices. Keep it up!.