CHICAGO (7/10/15)--When communities face financial hardship, credit unions step up to see them through, even when the effort takes a collaboration among many credit unions and the goal is to help consumers across an entire state.
Illinois Treasurer Michael Frerichs announced Thursday that through a partnership with the Illinois Credit Union League, credit unions across the Land of Lincoln will offer interest-free loans to state workers while the state’s government grapples with a budget impasse that could delay the paychecks of tens of thousands of state employees.
“We are grateful for the credit unions that have already agreed to offer no-interest loans to provide more financial options to state employees during tough budget times," Paris Ervin, director of communications for the treasurer’s office, told News Now.
Should the impasse freeze payroll checks on July 15, the treasurer’s office will furnish funds to participating credit unions through its linked-deposit program, a tool that allows the treasurer's office to funnel funds to financial institutions so they may offer low-cost loans to workers.
Roughly 60,000 state employees are estimated to qualify for the $50 million, in total, that will be made available by the treasurer. Credit unions have their own discretion to decide whether to offer the loans to nonmembers.
“True to their mission of ‘People Helping People,’ Illinois credit unions are stepping up to assist their members’ financial needs,” said Tom Kane, league president/CEO. “Partnering with the Illinois state treasurer’s office will provide even more resources to help them weather the budget impasse.”
Similar to the Loan Assistance Program offered by Credit Union 1, Rantoul, Ill., which along with the league helped recruit other credit unions for the statewide effort, loans can’t exceed 50% of an employee’s pay.
The loans also remain interest-free until 30 days after regular payroll resumes. Beginning the 31st day, a 9.9% interest rate is assessed on the remaining loan balance, which is owed to the credit union, including interest.
The state charges credit unions a 0.01% interest rate on the funds it provides.
“Credit Union 1 is pleased to again provide assistance to state of Illinois employees should their payrolls be interrupted due to the budget impasse,” said Brenda Crane, Credit Union 1 senior vice president/chief operating officer.
Added Alan Meyer, president/CEO of 1st MidAmerica CU, Bethalto, Ill.: “Along with (our) Payroll Interruption Loan Program, we also encourage employees that currently have loans with 1st MidAmerica to contact us and review their payment options. Out staff will be available to review the full details of available programs with any interested state employees.”