If that’s the case, some credit unions are making amends by financing green initiatives such as hybrid vehicles, solar panels, and home improvements.
Green lending is relatively new at credit unions, and data about it is limited. A survey of 144 credit unions by the Filene Research Institute, “Finding Sustainable Profits: Green Lending in Credit Unions,” found that 42% of respondents offered at least one of the green lending products the survey identified.
The report also revealed that green loans:
• Are low-risk. Borrowers tend to have pristine credit, and most participating credit unions had no delinquencies.
• Require no special underwriting.
• Attract young borrowers. Most members who apply for green loans are 20 to 40 years old.
• Are unsecured.
• Have an average balance of $10,000 to $20,000.
With loan margins at historically low levels, financial institutions are on the lookout for new opportunities to grow their portfolios—making green loans an option worth pursuing, says Vince Passione, president/CEO of LendKey, a CUNA Strategic Services alliance provider.
It’s critical, however, to understand what it takes to run a successful program, he says: connections, experience, and the ability to juggle a wide variety of moving parts.
In the video, Passione discusses credit unions’ role in green lending.