INNOVATIVE LENDING PROGRAMS

INNOVATIVE LENDING PROGRAMS SANTA CRUZ COMMUNITY CREDIT UNION

Since our inception in 1977, as a Community Development Financial
Institution, the Santa CRUZ Community Credit Union has been providing
support for community-based economic development projects. As the third
largest community development credit union in the nation, we are a full
service financial institution with $19 million in assets and 6100 members.
We offer a wide variety of services, including savings, checking, IRA, ATM,
VISA, bank by phone; consumer, real estate, and community development loans.
Most of our members consider us to be their primary financial institution.
As an indication, last year, we performed over 450,000 transactions and
cleared 550,000 checks. We are most proud of are our community
development loans. We have loaned over $34 million to small businesses,
nonprofits, and cooperatives. These have included ventures based upon
principles of democratic management and cooperative ownership. The vast
majority of workers (recipients or residents) of these ventures are low
income. As a nationally-recognized small business lender, the Community
Credit Union is one of only four SBA 7A certified lenders and is one of the
largest lenders for the State of California's Cal Coastal small business
loan guarantee program. We make about $4 million in small business and
nonprofit loans each year. We are currently holding `213 community
development loans in our portfolio, with an average balance of $14,000.
Our historic charge off rate is 0.43%.

Here are some examples of our innovative lending programs:

SBA LOW DOC PROGRAM
The SBA is known for it~s small business loan guarantee programs, most
notably the 7A and 504 programs. The newest program offered by the SBA is
called the "Low doc" program. It is for smaller small business loan requests
of $10,000-$l00,000. They have streamlined the loan application process
considerably and reduced the documentation. The credit union processes and
approves the loan request and sends it to the SBA for their review. The SMA
provides a 90% guarantee, thereby considerably
reducing the credit union's exposure.
This program allows a credit union to make small business loans, including
to start ups and theoretically placate regulators' concerns about business
loans. The SBA seems particularly interested in making Low Doc loans to
women- and minority- owned businesses. The credit union must be SBA
certified to submit loans. Since the program inception last September, we
have made six loans totaling $270,000.

CHILDcARE REVOLVING LOAN PRoGRAM
Support of childcare providers is a high priority for our credit union.
However, we have found that it is often difficult to properly document the
lending decision due to insufficient demonstrated ability to repay and
collateral. So we decided to use one of our 50lc3 nonprofit affiliates,
Community Ventures Inc. (CVI), to raise funds to assist in these efforts. We
have raised $67,000 from a foundation, businesses, individuals and the
County of Santa Cruz for this revolving loan program. Funds are pledged by
CVI for 100% share secured loans made by the credit union at 3%. The loans
are made to nonprofit childcare providers primarily serving low income
children. We have made over $60,000 in loans.

AFFORDABLE HOUSING PROGRAMS
As the third most expensive housing market in the
nation, we consider the support of affordable housing for
low income persons particularly important to our mission.
We have a number of affordable housing programs:

Via Pacifica Gardens: Our other 50lc3 nonprofit, Seascape Senior Housing,
is the developer and owner of this so unit low income elderly and
handicapped housing project. The $6.7 million in funding was provided by the
Community Credit Union, HUD, Teamsters Pension fund, County of Santa Cruz,
Central Water District, and Christian Church Homes.

Affordable Housing Revolving Loan Program: $75,000 in excess funds were
recaptured from the Via Pacifica housing project, for use on affordable
housing projects. Funds are loaned out at 3% and are fully share secured.
They have been used as bridge financing on a number of low income affordable
housing projects.

Earthquake Replacement Housing Program: In the aftermath of the 1989
Earthquake, the American Red Cross provided a $300,000 interest free loan to
a local housing nonprofit and the Community Credit Union to develop new
affordable housing to replace the substantial low income housing stock lost
in the quake. Share secured loans are made to the housing nonprofit at 3%.
They have been used to provide bridge financin4 for a variety of projects
including a mixed use, affordable housing/startup small business project, a
low income single parent student housing complex and a limited equity low
income housing cooperative.

Cooperative Membership Share Financing Program:
This program provides low interest rate financing for low income residents
of mobile home parks and apartments that are beinq converted into limited
equity cooperatives. Loans are fully or partially secured with funds from
the County Redevelopment Agency. We have raised $70,000 for this program.

WATSONVILLE MICRO BUSINESS LOAN GUARANTEE PROGRAM -
The City of Watsonville is located in predominately agricultural part of
our county. The official unemployment rate is 24% and over 60% of the City
residents are Hispanics. The purpose of this program is to make higher risk
loans in the City of Watsonville, with a particular emphasis
on-minority-owned small businesses. It is like a local SBA program. The
credit union process small business loan requests. On those loans which we
feel are viable but higher risk, we obtain an 80% loan guarantee from the
City. We make the determination as to the necessity of the guarantee and the
City bureaucracy is minimal. It is funded with $250,000 in "Measure E"
(Earthquake) funds from the City.

COMMUNITY VISA PROGRAM
We have a VISA program with over 1900 cardholders. We consider this
program to be the best type of credit for beginners and/or persons with past
credit difficulties. There are two unique features: We offer credit limits
as low as $250 (with as little as $125 frozen) for credit beginners and we
have the Community VISA Donation Fund. Each time a cardholder uses their
Community VISA card, we donate 5 cents towards the Donation Fund. Each year,
cardholders nominate and vote for community groups to be the recipients of
the funds. Thus far, we have donated over $18,000 to a variety of community
groups focusing on: child abuse, homeless shelters and ~arden project,
migrant farmworker health clinic, Women Against Rape, Hospice Caring
Project, the AIDS Project, an affordable housing pro~ram, environmental
groups, Save our Libraries, and various reproductive rights groups.


OTHER INNOVATIVE LENDING PROGRAMS

Startup Business Incubator Loan Program: The purpose of this program was
to provide affordable financing for startup low income businesses which are
supported by a small business incubator program. $85,000 in funding came
from the City of Santa Cruz CDBG program, the Packard Foundation, and the
Community Credit Union. This program has been completed.

Small Business Micro Loan Guarantee Program: The purpose of this program
is to make hi her risk loans to small businesses. It is funded with 250,000
in funds by the credit union and Cal Coastal, a State of
California-supported small business loan guarantee program.


SANTA CRUZ COMMUNITY CREDIT UNION
Jeff Wells
512 Front Street, Santa Cruz CA 95060
408-425-7708
FAX 425-4824


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SANTA CRUZ COMMUNITY CREDIT UNION
Jeff Wells

What is your eamil address?

Thanks
Barry I. Schneider


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Santa Cruz Comm Credit Union.

From: David Neale,Core Development Inc, San Jose
My Email Address:

DNEALE1@AOL.com


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