Credit unions
By joining your business with a credit union, you can invest and borrow money together with other entrepreneurs without the involvement of a bank. Read how a credit union works to provide loans.
What is a credit union?
A credit union is a non-profit cooperative of entrepreneurs who provide other entrepreneurs credit. The members of a credit union are business owners. The members determine the policy together, elect the board and jointly own the credit union.
Investing together
A credit union has money the from members of the cooperative and / or professional market participants. It lends this money to other members of the cooperative, without the involvement of a bank. This gives the members of the credit union and the involved professional participants the opportunity to invest in a specific industry or region together. They share the investment risk. Some members are also active as business angels or informal investors, where they themselves invest outside a credit union.
A coach supports the credit union’s loan recipients. To increase the company's chances of success, the coach is one of the members of the credit union. So, a credit union consists of members who finance and of members who are financed.
Target group and product
Credit unions mainly focus on SMEs in the Netherlands that have difficulties getting financing from traditional financiers. Each credit union selects its own specific target group within the SME sector, usually a specific business sector or region.
Credit unions provide loans of €50,000 to €250,000, or sometimes more. The duration is between 1 to 10 years. Credit unions raise funds for this purpose through member certificates (documents stating that a member owns part of a business's assets) or bonds (debt instruments intended as loans) that they issue.
2 kinds of credit union
There are 2 kinds of credit union:
- The classic model. These credit unions grant loans on behalf of all depositing members collectively. They share the entire risk and any returns.
- The mediation model. In these credit unions, one member invests as an individual investor in one loan applicant. Sometimes, a number of members invest in one loan applicant. Only the contributors who participate in the investment share the risk and return.
An up-to-date overview of existing credit unions in the Netherlands and credit unions in formation can be found at the sector organisations. Here you can also find more information about the 2 models:
- Vereniging Samenwerkende Kredietunies - work according to the mediation model, the classic model, and a combination of both (the so-called hybrid construction)
- Kredietunie Nederland - work according to the classic model
More success with your financing application
When looking for financing, make sure to look closely at the required criteria. Use the financing flowchart to select an alternative form of financing that fits your situation.
Help with financing
Getting help increases your chances of financing. With the right advisor and sound financial backing, the chances of financing being approved are greater. These advisers will help you on your way.