Over the last two years, these tricky times have required creative solutions. For many credit unions, liquidity still sits at through-the-roof levels while investments continue to yield bottom-of-the-barrel returns. In turn, some credit unions are turning to a solution that isn't quite "new," but innovative nonetheless: loan participations.

They're a perfect tool when you have more loans than you want, but don't want to "turn off the engine." They're equally helpful when you have excess funds (i.e., today's landscape) that need to be deployed into loans despite a potential lack of organic demand within your membership.

For the skeptics in the room, I know what you're thinking: "time-consuming hassle." And you're right. Historically speaking, loan participation transactions induce their share of headaches. Typically, there are three major pain points:

  1. The time and effort required to complete the transaction.
  2. Negotiating a master loan participation agreement. 
  3. Completing the required due diligence.

When faced with just one, the challenge feels surmountable. Altogether, they present a sizeable challenge that most executives may not have the time to deal with. So, what's an executive to do? Some might pump the brakes on originating new loans. Others might reach for the low-hanging investment fruit that gets the job done but doesn't quite align with their credit union's strategic goals (i.e., earnings or putting loans on their books).

Over the last five years, many organizations, including Alloya Corporate Federal Credit Union, have taken notice of these pain points and developed new tech-forward alternatives to address them. What once induced a headache can now be a non-issue. Today, this decades-old balance sheet management tactic is nearly everyone's new-old favorite tool in their proverbial toolbox – and for good reason! 

Call it what you want to. Win-win. Symbiosis. You-scratch-my-back-I'll-scratch-yours. You get the idea. What one credit union needs, the other can provide. They epitomize the credit union philosophy of "people helping people." As I like to say, loan participations are, "the credit union way to manage a balance sheet."

At Alloya, our Loan Participation Platform alleviates all the aforementioned headaches and more. Our program was built for credit unions by credit unions and is owned by credit unions, too. Read that twice.

There's a famous quote by Charlie Munger that states, "Show me the incentive and I'll show you the outcome." Ask yourself, "What are the incentives of other loan participation providers? Are they in the business to help ensure credit union success or are they beholden to their owners to maximize profits and line their own pockets?"

Unlike other providers, we don't stop at providing a transparent marketplace with efficient due diligence management. I won't deny, those components are meaningful. But credit unions deserve more, so we upped the ante. 

Alloya's program offers best-in-class reporting and unmatched analytics on top of world-renowned support that comes standard with every product and service at Alloya. Seriously, look it up! We're consistently ranked as a top-tier employer of choice by Gallup because our people love what they do and care deeply about the credit unions we serve. And our members love us too; you don't see record-setting member survey scores for eight consecutive years otherwise. 

Whether you're looking to serve your membership by originating new loans or give your bottom line a boost through a loan participation investment, I invite you to explore Alloya's Loan Participation Program. We're here to support your success and make your job easier. It's that simple.


Contact us at [email protected] .

Bill Paton Vice President, Loan Participations, Lending & Subordinated Debt, Alloya Corporate FCU

As the Vice President of  Loan Participations, Lending and Subordinated Debt, Bill Paton is responsible for the overall performance of Alloya Corporate's loan portfolio and related liquidity products. Bill oversees the sales and distribution of Alloya's debt capital markets programs and has a keen focus on member service as well as the present and future health of the corporate's balance sheet as related to its loans.

Bill received his Bachelor of Arts in economics from Hartwick College in Oneonta, NY.


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