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By the end of 2017, nearly 60% of Americans had less than $1,000 in savings. While living paycheck to paycheck like that is certainly manageable, it doesn’t leave much wiggle room for emergencies. When crises occur, quick small loans can help people without ample savings.
Credit unions have a certain responsibility to do right by their members. If they didn’t, they’d be banks! One of the best ways credit unions can ensure the financial health of their members is to offer quick small loans when their cash flow takes a hit or is interrupted.
In this article, we’ll look at a couple ways that credit unions can help their members during an emergency.
When Certain Substances Hit Certain Rotating Air-Displacement Fixtures…
Things go wrong in life. Cars get towed, businesses lay off employees, valuables get stolen, and houses burn down. Sometimes it’s worse. Sometimes hurricanes destroy entire cities and surrounding areas. Earthquakes topple buildings. Wildfires force evacuations and sometimes consume homes, businesses, and more.
Any of the above scenarios represent a significant loss of income for credit union employees. When such income-disrupting issues occur, many people without a sizeable sum in their savings accounts may find it difficult to meet their financial obligations.
Credit unions have an opportunity to keep their members’ heads above water during emergencies. By offering quick, small loans in a crisis, credit unions can help their members maintain solvency when nothing else is going right.
Quick, Small Loans to the Rescue
Small-dollar lending platforms still have a reputation as dubious financial services. However, it’s a massive industry, and it’s fueled by one broken arm, one blown head gasket, or one missed shift at a time.
Instead of decrying the industry and stigmatizing the need for quick, small loans, credit unions should seek to understand who needs small-dollar lending, and why. The fact is that most Americans are not well-equipped to handle a surprise bill or loss of income. Credit unions who understand this reality position themselves to better address and improve their members’ financial health.
Members who need a short-term lending solution are going to find it somewhere. Their best option is to borrow from a lender who has their best interests at heart. Who better than their very own credit union?
Credit unions that offer quick, small loans give their members alternatives to predatory payday lenders. Members who borrow small sums can avoid the exorbitantly-high interest rates of unscrupulous lenders, which protects their long-term financial viability.
Similarly, credit unions who offer small, quick loans can enjoy a slight increase to their margin.
How Credit Unions Can Help Their Members
Not every member is going to need a small, quick loan. In fact, most won’t. And that’s a good thing.
However, those for whom small-dollar lending helps will be far better off for it. They’ll be able to avoid debt traps from payday lenders while maintaining solvency.
When emergencies arise—and they always do—credit unions with quick, small loan programs will be better equipped to assist their members with a little extra cash.
To learn more about how small-dollar loans can help credit union members in times of severe financial distress, check the links below, or download our Member Crisis Guide.
Check out some of our other blogs here:
- What Level of Staffing Do I Need for My Credit Union Small-Dollar Loan Program?
- Overcoming Potential PR Issues from Credit Union Small-Dollar Loan Programs
- The Member Segments Most Affected by Credit Union Small-Dollar Loan Programs
- Measuring the Success of Your Credit Union’s Small-Dollar Loan Program
- Best Practices for Marketing a Credit Union Small-Dollar Loan Program