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Loan participations and our new funding (and investment) solution


To learn more about participation lending and LoanStreet, check out the NCUA’s recent webinar on September 16: Participation Lending. The closed-captioned archive will be available on NCUA's video page, beginning October 7.

By Perry Jones, VP, Portfolio Manager

October 29, 2015 -- Understanding one of our primary functions as your corporate is as a liquidity partner, Corporate One works diligently to offer our members a comprehensive suite of funding solutions. We are pleased that our newest solution, being offered through LoanStreet, allows for easy entry into the loan participation market, which can be an effective method for funding assets, as well as growing and diversifying your credit union’s loan portfolio.

Why loan participations?

Loan participations, which are simply the sharing or selling of interests in a loan, are advantageous to originating/seller credit unions for several reasons:

  • You obtain liquidity to serve other members
  • You gain more leverage to manage regulatory loan caps
  • You have the ability to spread lending risks

Through loan participations with recourse, credit unions can directly fund a loan or a pool of loans while simultaneously retaining the credit risk exposure. However, the more prevalent non-recourse loan participation allows the seller to transfer the risk of the participated portion of a loan, or loans, to the purchaser or investor of the loan participation. This transaction provides liquidity to the seller and also transfers the credit, interest rate and prepayment risk of the loan to the investor.

Being able to assist with the growing loan participation market represents the next great opportunity for our suite of funding solutions and our credit union members. According to a recent webinar presented by the NCUA, loan participation potential is huge: “If credit unions could efficiently and cost-effectively participate loans, they could maximize the industry’s lending capacity, support small credit unions, and increase the industry’s market share.”

How LoanStreet and Corporate One work for you

LoanStreet is a web-based, loan participation solution that automates and standardizes partial and whole loan sales on a non-recourse basis. LoanStreet also offers resources, such as a sample loan participation policy, to participants so they have all they need to get up and running with loan participations quickly.

Corporate One will assist members with understanding the regulatory requirements and opportunities surrounding loan participations, registration on the platform, and the transactional aspects of selling and buying loan participations via LoanStreet.

So be on the lookout for additional articles, webinars, and other training opportunities to expand your knowledge and comfort level with loan participations. Or, if you are ready to get started and would like additional information now, please contact your membership relationship executive.