Question of the Week

Question: Can we lend the par value to a potential member to join the credit union?

Answer: No. We cannot provide services to non-members, which would include lending the par value of a share to join a credit union. This is often a question when discussing indirect lending relationships where we are juggling opening a loan and acquiring a new member at the same time. 

However, the credit union may pay the par value on behalf of the member to initiate membership, at which time lending would be fine since the borrower on a loan is now a member. NCUA has expressly mentioned and approved of this arrangement. You just can’t lend it to them or retrieve it once membership is established (which would also be a loan to a non-member).