“People helping people,” the Credit Union mantra, carries more meaning today than it has in recent memory.
With the death of George Floyd and the spotlight shining on the disparities faced by black Americans, Credit Unions have a unique opportunity to not only continue to finance minority business, but also to build upon it. At the same time, it must remain supportive of Black, indiginous and people of color (BIPOC) teammates, who provide different perspectives, as well as embrace equality and inclusion of all employees and members.
“The Credit Union mission of ‘people helping people’ calls on us to recognize the inequities facing black members and black communities. We can and should do more to listen, learn, speak up, and take action to help dismantle racial disparities,” said CUNA President/CEO Jim Nussle.
Credit Unions have traditionally been the trusted partner for many members, especially those with less-than-perfect credit, entrepreneurs with a hope and a dream but not much in the way of assets, and anyone looking for more favorable terms on a mortgage or car loan.
Credit Unions, in particular minority Credit Unions, are an important source of accessible financial services and are key to reaching financially underserved communities. According to the Credit Union Times, the Federal Reserve’s Survey of Consumer Finance in its most recent report, found Credit Unions serve more Black Americans: 17% vs, 12.8 for banks.
The Credit Union National Association Board recently passed a resolution to underscore its stance of supporting members who have been marginalized and harmed by racism. The resolution also directs CUNA to work with credit union partners, such as the African American Credit Union Coalition, to create measurable ways that the organization can act on by August 10, the 86-year anniversary of President Franklin D. Roosevelt signing the Federal Credit Union Act into law.
Minority-owned businesses are on the rise, according to the most recent data from the U.S. Census Bureau, offering Credit Unions more opportunities to support them. During the past 20 years, the United States has seen steady growth in the number of businesses owned by BIPOC. That boom is due to generally positive economic trends, better education and access to capital. Credit Unions, with their emphasis on members’ personal financial success, have played a large role in funding those businesses.
In addition, the U.S. Senate Committee of Small Business and Entrepreneurship found that in the last 10 years, minority businesses comprised more than 50 percent of the two million new U.S. businesses and created 4.7 million jobs. Overall, more than four million U.S. minority-owned companies garnered annual revenue totaling close to $700 billion. But, despite their economic contributions, minority-owned firms continue to have a much harder time accessing small business loans than their white counterparts.
Minority-owned firms are less likely to be approved for small business loans than white-owned firms, despite being the engine of employment in emerging and minority communities. When they do get approved, minority-owned firms are more likely to receive lower amounts and pay higher interest rates, according to the U.S. Department of Commerce Minority Business Development Agency. Naturally, such discrepancies have made minority business owners more hesitant to apply for small business loans.
The Credit Union credo of people helping people is particularly relevant today as society recognizes unfair social and business practices and works to correct them. Meanwhile, Credit Unions have a history of actively investing in minority and disadvantaged communities, as well as employing their residents. The supportive Credit Union culture has historically supported all of its teammates in order to include a diverse and robust exchange of ideas among employees and the members and communities they serve, and that will continue to be the foundation of its future strategies as well.