Form NCUA 6058 NCUA 6058 Community Development Revolving Loan Fund (CDRLF) Progra

National Credit Union
Administration
Office of Small Credit Union
Initiatives
Community Development Revolving Loan Fund

Program Guidance
and
Loan Application

Table of Contents

Program Guidance ___________________________________________________________________ 3
1.

What is the Community Development Revolving Loan Fund (CDRLF)? ___________________ 3

2.

Which credit unions are eligible to apply? __________________________________________ 3

3.

How much money is available? __________________________________________________ 4

4.

When can my crey application dates? _____________________________________________ 4

5.

What are allowable uses of the loan funds? ________________________________________ 4

6.

What are ineligible uses of the loan funds? _________________________________________ 5

7.

What are the terms and conditions of receiving a loan? _______________________________ 6

8.

What information must credit unions submit with the loan application? _________________ 7

11. Are there any priorities that credit unions should be aware?___________________________ 9
12. How should credit unions submit completed applications? ___________________________ 10
13. What reporting requirements are there after receiving a loan? ________________________ 10
14. How can a credit union contact the Office with questions? ___________________________ 10
15. Is there an application appeal process? ___________________________________________ 11
Loan Application _________________________________________________________________ 12

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Program Guidance
1. What is the Community Development Revolving Loan Fund (CDRLF)?
Congress established the National Credit Union Administration’s (NCUA’s)
Community Development Revolving Loan Fund (CDRLF) to support credit unions
that serve low-income communities. The Office of Small Credit Union Initiatives (the
Office), within the NCUA, is the administrator and manager of the CDRLF. To fulfill
its objective, the CDRLF provides low-interest rate loans and technical assistance to
qualifying credit unions known as low-income designated credit unions. Loans1
made available to such credit unions through the CDRLF enable them to:

provide financial and related services to their members;

improve the long-term growth and stability of the credit union; and

improve their capacity to serve their members and communities.
2. Which credit unions are eligible to apply?
The following types of credit unions may apply for funding under the CDRLF:
a. A federally chartered credit union designated as a “low-income” credit union
(LICU) per NCUA’s Rules and Regulations, Section 701.34.
b. A state chartered credit union that has an equivalent low-income designation
from its respective state supervisory authority (SSA) and concurrence from
NCUA.
Note: A credit union must have a Dun and Bradstreet Data Universal Numbering
System (DUNS) number in order to receive funding through the CDRLF.2 Credit
1

NCUA, in its sole discretion, may allow a credit union to record a CDRLF loan as either a note payable or a non-

member deposit. Current regulatory guidance does not allow for classification of a CDRLF loan as secondary capital.
2

Based on an Office of Management and Budget (OMB) policy directive effective October 31, 2003, credit unions
must have a Dun and Bradstreet Universal Numbering System (DUNS) number in order to be eligible to receive
grant or loan funding from the CDRLF.

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unions may obtain a DUNS number by contacting Dun and Bradstreet, Incorporated
(not affiliated with NCUA):
Website: http://www.dnb.com/us/

Telephone: 1-800-234-3867

3. How much money is available?
Based on funds availability, NCUA has approximately $3 million available for
CDRLF loans. The amount currently available for loans results from payments of
principal and interest received during the year. The maximum amount that a single
credit union may receive is $300,000. There is no minimum loan/deposit amount. A
credit union may receive funding in the form of a loan, a deposit, or a combination of
a loan and a deposit.
4. When can my credit union apply?
Eligible credit unions may submit an application for funding anytime during the year.
NCUA will process the applications subject to funds availability.
5. What are allowable uses of the loan funds?
In approving a loan, the Office will give priority to applicants that demonstrate the
greatest impact in reaching and providing products and services to the community or
low-income members.
Projects for which funding is requested, must focus on new or enhanced services.
Funds will be available for projects that provide new or better services to existing
members and extend services to potential members and the community. The
following list, while not exhaustive, provides examples of uses for these CDRLF
loans:

•

Providing new services or expanding existing services, such as ATM
machines, and debit/credit card services to members;

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•

Extending technology to members through web services, such as online
deposit and loan services, online bill pay, and website design and
implementation;

•

Relocating or renovating credit union offices in new or expanded geographic
areas;

•

Providing products/services as alternatives to payday lending;

•

Offering outreach services, such as translation, financial education and
homeownership counseling; and

•

Supporting credit union community financial education efforts, e.g., curriculum
taught in a foreign language.

6. What are ineligible uses of the loan funds?
Generally, requests to provide funds for projects that improve the overall operations
or financial condition of the credit union are ineligible for a CDRLF loan. The
following list of uses is ineligible for funding under the 2009 round of CDRLF. The
list below is not all-inclusive:
 Recurring operational expenses such as salaries, rent, maintenance
agreements, annual audits, funding for the allowance for loan losses, or office
supplies;
 Expenses for consulting services on administrative or operational items such as
development of a strategic plan or loan policies; and
 Investment of funds solely to increase gross income.

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7. How must the credit unions market and measure the potential impact of the
proposed loans funds?
Credit unions must demonstrate their ability to provide said product or service in the
marketing strategy as included in the business plan. The marketing strategy should
specify whom the credit union wants to target and how management intends to
reach said target (i.e. newspapers advertisements, word-of-mouth, visiting local
churches, etc.). In addition, the marketing strategy should articulate how
management intends to measure the proposed service/product’s success (i.e.
comparison of projected utilization against actual utilization).
For example, incorporate in the plan the number of members management
anticipates will use the proposed product or service (such as financial education)
based upon the marketing strategy and evaluating the intended usage against
actual usage. The table below provides an example how a credit union could track
this information:
Financial Education

Planned

Actual

Variance

Seminars Per Year

12

8

-4

Attendees Per Year

150

112

-38

Length of Seminars (in hours)

1.5

1

-0.50

Instructors Per Year

2

5

+3

Educational Materials Distributed

75

100

+25

Shares3

$25,000

$30,000

$+5,000

8. What are the terms and conditions of receiving a loan?
Loan Terms

Interest rate: Loans/deposits under the CDRLF are for a fixed interest rate. The
minimum interest rate is 1%; the maximum interest rate is 3%. The interest rate

3

Number in thousands of dollars

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for the prior month-end is available on NCUA’s website at:
http://www.ncua.gov/Resources/Reports/CDRLF.aspx (Click on the monthly
“Financial Statement” report).

Term: Loans/deposits are normally required to repay in five years. Shorter
repayment periods may be considered.

Repayment: Interest payments are due semiannually beginning six months after
the initial distribution of a loan. Credit unions are to repay principal payments on
loan/deposit in semiannual installments beginning one year after the initial
disbursement.
Conditions (Matching Funds)
Within one year of receiving a loan/deposit, a credit union must match the
loan/deposit with member shares or non-member deposits. The credit union must
include the matching plan in the 18-month business plan. The plan must meet the
matching requirements of NCUA Rules and Regulations Part 705.7(b).
9. What information must credit unions submit with the loan application?
A credit union must submit a complete Community Development Revolving Loan
Fund Loan Application. The application must include the signed application form,
response to all questions in the application, signed certification form, and other
supporting information as required in the application. The Office will not consider
incomplete applications for funding.
10. Explain the loan process.
a. An eligible credit union must complete and submit an application for funding by

the application deadline.
b. The credit union must submit any additional information requested by NCUA as a

part of its evaluation process.

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c.

After notification of loan approval by NCUA, the credit union must complete and
return the loan agreement, related documents, and any other actions within the
timeframe specified by NCUA in order to receive disbursement of the loan.

11. How will the Office evaluate applications?
a. Each application will undergo an eligibility review to determine:
1. We received the application by the deadline.
2. The applicant is eligible to participate in the program. As discussed
above, a credit union must have a low-income designation (or the
equivalent thereof, in the case of state-chartered credit unions) in order to
receive funding through the CDRLF.
3. The application is complete.
4. The purpose or proposed use of funds is eligible for funding.
5. The applicant has a favorable compliance record with respect to past
funding under the CDRLF.
The Office will not consider an application that is determined late, ineligible, or
incomplete for funding.
b. Each application that is determined eligible, complete, and consistent with the
purpose(s) will be evaluated based on the following financial and nonfinancial
criteria:
Financial factors include, but are not necessarily limited to, the following:
4

 NCUA CAMEL Rating
 Net Worth Ratio
 Delinquency Ratio

4

CAMEL ratings explanations are in NCUA Letter to Credit Unions No. 07-CU-12. Financial ratio explanations are in

the Users’ Guide for NCUA’s Financial Performance Report. Both documents are available on the NCUA website at
http://www.ncua.gov.

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 Return on Assets Ratio
The Office uses financial data and indicators to determine the overall strength
of the credit union and its ability to carry out the project as described in the
loan application. Financial performance can result in application denial
irrespective of a well-conceived business plan or the proposed use of funds.
Non-financial factors include the following:
Assessment of Management
This criterion is a determination of whether credit union management has
been responsive to examiners and whether management has the ability to
carry out the project described in the loan application. The Office will seek
concurrence with the respective region to ascertain management’s ability
to handle the proposed plan or undertaking. Those credit unions coded a
“4” or “5” in management will generally not be considered for funding.
Community Needs Plan (No more than 5 pages)
This criterion considers how well the credit union proposes to serve the
needs of its members and the community with the CDRLF loan. This
criterion also considers whether the plan involves existing community
development partnerships and programs with state and/or other federal
agencies.
12. Are there any priorities of which credit unions should be aware?
Yes. As funding is limited5, our goals are to lend to those credit unions where
funding will have the greatest economic impact for the members, the potential
members, and the community. As such, the Office will favor new endeavors.
Therefore, we will give priority to credit unions:
5

The Office removed arbitrage and liquidity from allowable uses of CDRLF loans for the 2008 funding round as the
available dollar amount for loans was limited.

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For new or improved services to the members and/or community.

With no outstanding CDRLF loan balance.
13. How should credit unions submit completed applications?
Credit unions may submit completed applications to the Office of Small Credit Union
Initiatives (the Office) through one of the following means:
By facsimile: (703) 519-4088
By email: [email protected]
A credit union that is unable to submit an application by facsimile at (703) 519-4088
or email, must contact the Office at (703) 518-6610 before the application close
date. The Office will deny applications received after the application close date. As
such, we will not consider them for funding.
14. What reporting requirements are there after receiving a loan?
While a loan is outstanding, the credit union’s board of directors must report
annually to the credit union members on its progress in providing needed
community services (as outlined in the Community Needs Plan submitted with the
loan application). The credit union must also send a written report or summary to
NCUA by December 31, 2010. This report should incorporate quantifiable
information on the success of the product or service (similar to measurement
standards outlined in the marketing strategy portion of the business plan). A credit
union that fails to report as required may be determined ineligible to receive future
loans and/or technical assistance.
15. How can credit unions contact the Office with questions?
Credit unions may contact the Office:

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By email: [email protected]
By telephone: (703) 518-6610
16. Is there an application appeal process?
Yes. Credit unions may appeal the Office’s decision to deny an application to the
NCUA Board for a period of 60 days from date of the denial, except in cases where
denial is due to the lack of funds availability.

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Loan Application
1. FULL CREDIT UNION NAME
2. MAILING ADDRESS
.

3. CITY, STATE, ZIP
4. CONTACT NAME/TITLE
5. CONTACT PHONE
(INCLUDING AREA CODE)
6. CONTACT EMAIL ADDRESS
(PERSON SUBMITTING)
7. CREDIT UNION FAX
NUMBER
8. CREDIT UNION EMAIL
ADDRESS (INFORMATIONAL)
9. CREDIT UNION CHARTER
NUMBER
10. CREDIT UNION EMPLOYER
IDENTIFICATION NUMBER
(EIN)
11. CREDIT UNION DUN AND
BRADSTREET UNIVERSAL
NUMBERING SYSTEM NUMBER
12. AMOUNT REQUESTED

$

13. NAME AND TITLE OF
AUTHORIZED INDIVIDUAL

By signing this application, I certify that the statements herein are true, complete, and
accurate to the best of my knowledge. I also agree to comply with any resulting terms
if I accept a loan through the CDRLF Program.
SIGNATURE OF AUTHORIZED INDIVIDUAL

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DATE

Loan Application
14. Use of Funds
Submit a narrative (separate from Community Needs Plan and no more than one
page) articulating how you intend to utilize the proposed loans funds.
15. Community Needs Plan
Provide Community Needs Plan (no more than 5 pages—plans longer than this will
not be reviewed and thus, will result in application disqualification) that:
a. Describes the community’s need for financial products and services.
b. Outlines the credit union’s existing community services, financial products and
services that fulfill the community needs as described in 15a.
c. Describes the credit union’s current involvement/ partnerships with any
existing community based organizations, state or government community
development programs.
d. Details how the credit union proposes to use the CDRLF loan to serve the
needs of its members and community described in 15a.
e. Explains the credit union’s need for CDRLF funding.
f. Provides evidence the Board of Directors approved the Community Needs
Plan.

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Loan Application

16. Business Plan
Submit a business plan that:
a. Incorporates the Community Needs Plan.
b. Defines the marketing strategy to reach members and community.
c. Provides balance sheet and income statement 18-month projections with
assumptions for the credit union’s financial growth and/or development (e.g.,
capital, assets, deposits, and loans) and members/community services
growth. Examples include growth in:


unsecured [alternatives to predatory lending], auto, business, or real
estate loans;



regular shares; drafts, Individual Development Accounts, Health Savings
Accounts, certificates of deposit;



financial education classes held; and



new services (e.g., ATM, home banking).

17. Matching Funds
Submit a narrative (no more than one page) articulating your strategy for raising the
requisite matching funds6.

6

Generally loan monies made available must be matched by the participating credit union by increasing its share
deposits in an equal amount to the loan amount. However, any loan monies matched by member share deposits will
be credited as two-for-one match. Participating credit unions must meet this matching requirement within one year
of the approval of the loan application and must maintain the increase in the total amount of share deposits for the
duration of the loan.

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18. State
Statete-Chartered Credit Unions Only
In addition to the Items 1 to 17, submit a copy of current charter and any
amendments to the field of membership. For any amendments to the field of
membership, also include:
a. Evidence of approval of change by the board of directors
b. Evidence of submission and approval of change by the state supervisor
19. NonNon-Federally Insured Sta
State
tatete-Chartered Credit Unions Only
In addition to Items 1 to 18, submit the following:
a. Copies of the monthly balance sheet, income and expense statement, and
schedule of delinquent loans for the most recent 13 months.
b. Proof of Deposit and Surety Bond Insurance (commonly known in the industry
as the “Policy Deck Sheet”) which states the maximum insurance levels
permitted by the policies for non-member deposits.
c. A copy of the most recent external audit report.
20. Certifications
Certifications Form
Complete the Certifications Form located on page 18. The individual authorized to
sign the application must sign this form separately.

Credit unions are to submit completed
completed applications to the Office of Small Credit Union
Initiatives through one of the following means:
By email: [email protected]
By facsimile: (703) 519-4071

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Please note the Office will not review any unrequested and/or additional application
materials (i.e. letters of recommendation) and submission of these materials will result
in the disqualification of your application.
A credit union that is unable to submit an application by facsimile or email, must contact
the Office at (703) 518-6610 before the application close date.

Seven (7) business days after you submit your credit union’s application to
NCUA, you may confirm its receipt through this website address:
By signing below the authorized representative certifies that:
http://hqinetdevapp/CDRLFProgram/Default.aspx

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Application Checklist
 Completed and signed Community Development Revolving Loan Fund
Application
 Narrative detailing articulating intended use of proposed loan funds
 Community Needs Plan (limited to no more than 5 pages)
 Business Plan (incorporating community needs plan and marketing strategy)
 Balance Sheet and Income Statement 18-Month Projections with assumptions
 Narrative detailing strategy for raising matching funds
 Copy of current charter and any field of membership amendments (state
chartered credit unions only)
 The following items are to be submitted by (non-federally insured, state-chartered
credit unions only):
o Balance Sheet, Income and Expense Statement, and Delinquent Loans
listing for the most recent 13 months
o Proof of deposit and surety bond insurance
o Most recent external audit report
 Completed and signed Certifications Form

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Certifications
Certifications Form
 The credit union is currently a low-income designated credit union, as defined in
Section 701.34 of NCUA’s Rules and Regulations; and will comply with the
program objectives as described in the Program Guidance and in the application.
 The board of directors will report on the progress of providing needed community
services to the credit union members and NCUA as specified in Section 705.6 of
the NCUA Rules and Regulations.
 If approved for a loan, the credit union commits to raising matching funds as
required in Section 705.7 of the NCUA Rules and Regulations.
 The credit union conducts its activities such that no person is excluded from
participation in, is denied the benefits of, or is subject to discrimination due to
race, color, national origin, sex, age, or disability in the distribution of services
and/or benefits provided under this loan program. The credit union agrees to
provide evidence of its compliance as required by NCUA.

By signing this form, I certify that the statements herein are true, complete and accurate to the best of
my knowledge. I also agree to comply with any resulting terms if I accept a loan through the CDRLF
Program.

SIGNATURE OF AUTHORIZED INDIVIDUAL

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DATE