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A credit union is a not-for-profit financial institution that is run and owned by its members, unlike a bank, which may be publicly traded or privately owned. Credit unions offer many of the same services as banks, but credit union profits go back to members in the local community in the form of lower loan interest rates, higher rates on savings, and so on.

If you’re thinking about starting your own credit union in your community, understand that this is a large undertaking and that will require sufficient capital and a high-functioning management team. But fortunately for you, the National Credit Union Administration (NCUA) has developed a step-by-stepguide that makes it easier to strategize a plan for your startup. NCUA is the organization that can insure your new credit union, and their account coverages and resources can increase your odds of being approved for a charter.

Below, you’ll find a breakdown of those steps on how to start a community credit union, according to the NCUA guide.


Consider Whether a New Credit Union Will Succeed in Your Area

Before you dive headfirst into planning the startup of a credit union, you need to do some careful research of demographic and geographic considerations to make sure your credit union will be a success. Contemplate the following questions: Does your community have a need for a credit union or is it already saturated with local finance institutions? Do you have the financial resources and experienced personnel needed to get it going? If you feel you could successfully implement a new credit union in your area with your current capital and resources, proceed to review the steps below.


Step One

First, you are encouraged by the NCUA to research the charter process by reviewing the documents listed on page 11 of the NCUA guide, which explains compliance requirements for federal credit unions. Second, you should decide whether you’ll be a basic or a full-service credit union. Most fledgling credit unions start out as basic ones because they tend not to have as much experience in the world of finance, providing only necessities like small loans and checking/savings accounts.

Then, select a name (and an alternative name) for your institution that is not already in use and cannot be easily confused with another credit union. Credit unions are limited in the types of clients they can seek, so you should establish your field of membership, or decide on the group with which you have a common bond that distinguishes the type of members you have — whether it be people from a specific church, labor union, place of employment, association or geographic location. If you anticipate that your potential members will have low incomes, you can request a low-income designation.


Step Two

The next step involves identifying your subscribers, or the people who will prepare the charter application. These people will be investigated to verify their good character. Then, you’ll have to prove that you have the funding to cover the charter and start-up costs, as most institutions are not profitable in their formative years. The funding can come through donations, subsidies, associations or a loan from another credit union.

The second step also requires that you specify the intended locations of your main office and other branches that will exist upon opening. If you aren’t sure of the specific addresses, simply provide the city name and state.

Before completing the second step, you’ll need to gauge the level of interest in your new credit union by surveying potential members. Doing so will give you a better idea of the needs these people have and guide you in choosing which financial services to offer.


Step Three

In the third step, you will need to acquire experienced qualified management staff to act as decisionmakers and help you devise detailed business and marketing plans, draw up NCUA chartering forms, and develop procedures. Your business plan should include an enumeration of common bonds, plans for growth, current assets, and the costs associated with all the staff, equipment, and services you will need. These items will help the NCUA decide whether or not to approve your charter request. Upon completion of these steps, the NCUA will provide you with worksheets and checklists that will help you finish your application for a credit union charter. If you have any questions about the process, you can contact the NCUA directly by phone or email. You can also contact BMA to discuss custom software solutions that will benefit your members and ensure the growth and smooth startup of your credit union.

BMA is ready and willing to assist you in all aspects of your discovery, application and approval process. You can contact a BMA representative at 801.887.0122 or by email at either or We look forward to hearing from you and good luck in your credit union endeavor.