Business Loans Driving Credit Union Development in Netherlands
Small to medium-sized businesses in the Netherlands are being refused financing by banks, and they are turning to the country’s nascent credit union movement for member business loans.
The problem is that few, if any, credit unions are currently licensed, creating significant economic void in helping the European Union member country grow its economy.
Friederichs estimates that 46% of all Netherlands entrepreneurs fall into the funding gap that looms between bank financing and microloan capabilities. Specifically, small enterprises needed an estimated 4.5 billion euros in 2012, of which 42% was refused by banks, she said. Medium-sized enterprises need 6.5 billion euros, of which 26% was refused.
But greater issues exist for the Netherland’s nascent movement before staff expertise can be measured. The country’s Central Bank is wary of approving alternate banking structures due to past bad experiences with other models, Lampe said. After three years of lobbying, the Central Bank allowed credit unions to issue “perpetual” member certificates as a way to develop funding that would allow them to open. The only other option, Lampe said, was for credit unions to apply for a formal banking license.
“This is rather absurd for a beginning credit union with 2.5 million euros in assets and 1.5 FTEs on the payroll,” Lampe said. “In my opinion it is ethically not right to ask entrepreneurs to perpetually dispose of their savings money.”