Hi There,
The rules of most CU's have changed significantly over the last year. The financial regulator issued new guidelines to CU's Lending Policies.
The main criteria now is no longer the ratio of shares / loan but rather the ability to repay.
The ratio of shares / loan is no londer a competent policy as you may have €5000 saved - require €10000 but with your other outgoings you may not have the ability to repay.
I am on a board of directors for an Industrial / Commercial CU and we have declined loans to members regardless of their regular savings due to mortgage / credit card & loan repayments to other institutions & regardless of previous loans taken and repaid.
On the other hand we have approved loans we would not have before because the individual has
proven the ability to repay.
Auditors also no londer concentrate on the loan / share ratio. Not to say its not a factor as realisticly you cannot lend €10000 to somebody who has only saved €500.
Do not be nervious in the slightest. The ethos of the CU is to HELP members of the CU / Community.
Once you can prove the ability to repay - be honest about your current circumstances and provide the requested documentation you should be ok.
One last thing, they will want to see that by repaying this loan, you are not leaving yourself in finacial difficulty going forward i.e. You can repay the loan but are left with nothing to live on week by week.
From the Financial Regulators Guidelines:
Credit Committee
The credit committee considers and makes decisions on applications for credit within the framework and policies established by the board of directors.
The credit committee should inquire into the character and financial circumstances of an applicant for credit and security offered, if any, in order to ascertain the applicant’s ability to repay a loan in accordance with its terms and determine whether the loan is for a provident and productive purpose.
The principal risk to a credit union is ‘bad lending’ with resulting high loan delinquency and writeoff.
As a governance mechanism, strict guidelines for loan approval should be
established and rigorously adhered to.