Frequently Asked Questions
Want to know more about Credit Unions?
St. Mary’s Bank of Manchester, New Hampshire holds the distinction as the first Credit Union in the United States. St. Mary’s Cooperative Credit Association was founded by French-speaking immigrants to Manchester from the Maritime Provinces of Canada on November 24, 1908. As the leader of St. Marie’s church, Monsignor Pierre Hevey was instrumental in establishing this Credit Union. Attorney Joseph Boivin managed the credit union, as a volunteer, out of his home in the evenings. America’s Credit Union Museum now occupies the location of Boivin’s home, where St. Mary’s Bank first operated.
Credit Unions in the United States serve 100 million members, comprising 43.7% of the economically active population. U.S. Credit Unions are not-for-profit, cooperative, tax-exempt organizations. Total Credit Union assets in the U.S. reached $1 trillion as of March 2012. There are over 7000 independent Credit Unions in the United States.
Credit Unions have “share insurance” (deposit insurance) of at least $250,000 per member through the National Credit Union Share Insurance Fund (NCUSIF). This deposit insurance is backed by the full faith and credit of the United States government and is administered by the National Credit Union Administration. As of the end of 2007, the National Credit Union Share Insurance Fund insured more than $560 billion in deposits at 8,101 not-for-profit cooperative US Credit Unions. For comparison, the FDIC insured more than $4 trillion in deposits at 8,560 banks and thrift institutions. The NCUA and the FDIC are both independent federal agencies backed by the full faith and credit of the US government.
In the United States Credit Unions were historically formed around a single church, place of work, labor union, or town. Membership was limited to those who were in the field of membership. The Federal Credit Union Act of 1934 limited membership to “groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community or rural district.”
Credit Unions may typically be chartered to serve a specific employee or associational group or groups (often called a Select Employee Group or “SEG Charter”), all members of a trade, industry, or profession, or have a “Community Charter” (typically a field of membership of anyone who lives, works, goes to school, or attends religious services in a particular city, county, or counties). Typically, members’ families – such as immediate family or household members – can also join the Credit Union.
Credit Unions generally follow the principle of “once a member, always a member”, which allows a member with a current Credit Union membership to remain a member even if s/he would otherwise no longer qualify to be such.
Credit Unions have other distinguishing characteristics.
- Credit Unions operate as Not-For-Profit organizations.
- Credit Unions are managed through a volunteer Board Of Directors, whom receive no compensation for their position
- Credit unions are owned by their members, not an elite group of shareholders
How does a Credit Union differ from a bank?
Banks
- Banks are businesses operating to maximize the value of their stock.
- Banks have oversight from a Board of Directors that consists of shareholders.
- Most bank clients are not owners of the Bank’s stock.
- Some of the Bank profits are distributed to the elite group of shareholders.
- Banks compete with each other to gain market share in communities they serve.
- Bank stock is actively traded. Ownership is focused on maximizing shareholder value, which can result in the sale of the stock to a competitor, and Bank clients moved to a new institution without notification or input.
Credit Unions
- Credit Unions operate as Not-For-Profit entities. All income earned is either retained or distributed to Members (depositors).
- Members (depositors) are owners of the Credit Union.
- Credit Unions are managed through a volunteer Board of Directors whom receive no compensation for their involvement.
- Because Credit Unions do not have a stock to sell or purchase, a Credit Union is quite stable and not subject to ownership changes that their Bank clients are unaware of.
- Credit Unions work cooperatively among themselves, often sharing new initiative and resources through commonly owned entities, such as Spectrum Business Resources, LLC.
- Credit Unions are focused on serving the needs of member-owners rather than maximizing profits for an elite group of shareholder.
What is Spectrum Business Resources, LLC?
Spectrum Business Resources, LLC is a Credit Union Service Organization (“CUSO”) providing financial services to business and professionals and formed by five Member Credit Unions including Abri Credit Union (Romeoville, IL), HealthCare Associates Credit Union (Naperville, IL), Consumers Credit Union (Rolling Meadows, IL), NorthStar Credit Union (Warrenville, IL), and NuMark Credit Union (Joliet, IL).
We offer expertise in developing innovative loan and deposit products to fit the unique needs of small businesses and professionals. Our loan structures are flexible to coincide with our member’s unique needs and expectations. Our rates and fees are generally below competitors.
The combined assets of the 5 Credit Union members that created Spectrum Business Resources are approximately over $1 billion. We have a lending limit of over $5 million to a single member. We are located in the Chicago market, but service members nationally.
So How Do I Get a Commercial Loan?
- The most important factor in securing financing is the ability to provide a compelling argument that the business has the resources to repay the loan. Financial institutions will use depositors’ money to fund loans. Accordingly, they have a fiduciary responsibility, enforced by their federal regulators, to demonstrate sound lending practices and the ability to assure that the depositors’ money will be protected against loss.
- Sound lending practices are achieved by detailed analysis of the integrity and experience of the owners, the financial condition of the Borrower and ownership to determine its ability to repay the loan, analysis of the industry being served, confirmation of collateral values, and projected financial condition of the Borrower.
- To complete this analysis, the Lender will request detailed financial information of the Borrower and owners, explanation on the purpose for the loan, the amount needed, the proposed collateral to secure the loan, and background on the business and owners.
- Once all the requested information is received, it is analyzed and underwritten for review by a Loan Committee, and in 5-7 days of receipt of all requested information, the Borrower receives a confirmation, approval with modification to the requested terms, or a denial.
What information will be needed to process my loan request?
Ownership will be asked to provide confirmation of the loan purpose, supporting background on the business and ownership, collateral details, and other supporting documents that help the Lender understand and underwrite the loan, including:
- Details on ownership experience that may include a resume or bio
- A loan application form detailing the loan request, the name of the Borrower, and contact information
- 3 years of tax returns and accountant prepared FYE financials (compiled, reviewed, or audited where available) for the business
- Current personal financial statement of all owners disclosing financial condition, listing all owned assets, all personal debt, and sources and uses of income
- 3 years of personal tax returns for all owners
- Description of the collateral and any available supporting documentation
What is the Loan Process?
- Supporting information is requested and analyzed by an experienced Lender.
- A formal loan presentation is made to a committee (5-10 days from receipt of all financial information)
- Committee approves, denies, or modifies the loan request (2 days)
- Loan documents are generated (2-3 days)
- Loan is funded (Same day as executed loan documents are received)
- Annual or quarterly financial information is requested to assure that the Borrower continues to operate the business successfully
What Types of Commercial Loans are Available?
- Refinancing existing debt with another Bank or Seller at better terms
- Working capital loans – secured and unsecured
- Practice acquisition or partner buy-out financing
- Commercial real estate mortgages including refinancing existing mortgages, construction financing, real estate acquisition, and improvement build -out
- Equipment financing
- Investment real estate financing
- Financing for investment in business interests outside of ownership outside of the business
- Commercial funding for various business purposes
What are the advantages of working with Spectrum Business Resources and the affiliated Credit Unions?
- You become an owner in your Lending Institution.
- Your Credit Union Lender is a Not for Profit business that is not distracted by the need to maximize the market value of a traded or sold ownership interest in the Lending Institution. Instead, your Credit Union Lender is focused on you and your business whom they depend upon to maintain their own business, through services they provide at favorable terms not designed to maximize their profits, but to maintain a sound relationship with their members.
- Fees, rates, and terms are generally more competitive than other financial institutions.
- Spectrum Business lenders have over 30 years of experience in all types of commercial loans and financial advisory services.
- Spectrum Business provides advisory support, not just loans. Where Banks are transactional, Spectrum Business is truly relationship driven for the long term benefit of the Borrower.