BRONX, N.Y. – In what may be the first loan of its kind in the credit union industry, a consortium of five New York City-based credit unions have banded together to provide Rite Check Cashers, Inc. a $500,000 loan. The money will be used to remodel the interior and exterior of the check cashing institution's home office and store located at 715 East 138th St. in the Mott Haven section of the Bronx. The credit unions involved, including Bethex FCU, Union Settlement FCU, Homestead FCU, Lower East Side FCU and CSAE FCU, each provided $100,000 for the 5.5 year term loan with a 6.75% interest rate. Bethex Federal Credit Union, the Bronx, took the lead in banding all the credit unions together. Bethex already had forged a relationship with Rite Check last year, allowing credit union members to swipe their ATM cards at one of Rite Check's point-of-banking terminals at 11 locations and make deposits and withdrawals from their credit union account free of charge. The program also allows Rite Check customers to join Bethex FCU without giving up the convenience of their check cashing branch. The idea for the loan was Joy Cousminer's, president of Bethex. She listened to Joseph Coleman, president CEO of Rite Check, explain how his institution was about to approach a bank for a remodeling loan. "As a check casher, we had an existing relationship with a bank," said Coleman. "That was my first choice. Joy said, `let me see what I can do first.'" Cousminer, who contacted the other credit unions, said the loan idea came at a time when Bethex's loan demand was down from last year. For her, making the loan meant putting money to work. The process would have been faster if Rite Check received the loan from the bank. "Because there were five credit unions involved, it made things more difficult, with five lawyers putting together all the paperwork," said Coleman. "The credit unions, however, were great. It was just the nature of the deal that was time consuming." The entire loan process, from inception to finish, took six months. A long time, but as Coleman puts it, "This is another step in our partnership. Check cashers and credit unions are natural partners, which is odd because we have sort of been enemies for so long." Check cashers have had the reputation of charging high fees for their services and practicing pay-day lending at high interest rates. In New York State, that reputation is not deserved, said Coleman. "There a misunderstanding of what we are. We get a bad reputation because we happen to be a profit-making business in poor neighborhoods. We have found, however, that we are a formula that works for delivering financial services to low income neighborhoods. "I would wager that for a low-income person, it is going to cost them less for having a relationship with a check casher than a bank. By the time it does start to cost the customer more to be with a check casher, they can afford a bank account," he says. Rite Check is currently working with NCUA, New York check cashing regulators, the NYCE network and Chase Manhattan Bank on an expanded program so that check cashing institutions can accept deposits and make withdrawals for other credit unions. There are approximately 500 check cashing institutions in the state, giving a participating credit union, theoretically speaking, 500 branches. "The credit union doesn't need to develop all that infrastructure," Coleman explained. The concept started "in this little corner of the Bronx, but the idea is so intrinsically fabulous that it is going to spread," says Coleman. It has already spread to Actors Federal Credit Union, which has entered into a partnership with Manhattan Money Branch, a business providing check cashing and other transactional services. Bethex has added new members due to the partnership with Rite Check. The two institutions are now working on a promotional video program to market the partnership and shared capabilities. The Remodeling of the Rite Check headquarters and branch is scheduled to be completed by the end of the summer and will include new teller windows, tile floors, and the knocking down of brick walls for the placement of windows for more natural lighting. "It will look like a modern check-cashing facility," said Coleman, explaining that the industry has been updating the appearance of its stores over the last several years, from foreboding to pleasant. – [email protected]

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