Income Advance Guide: The credit union value proposition

The Filene Research Institute conducted an 18-month feasibility study to demonstrate that ESSDL programs like Income Advance provide a practical way for credit unions and employers to help low-to moderate-income wage earners obtain affordable credit. Key findings of this study include:

• All participants found that the ESSDL was easy to launch and manage.

• 7 of 11 participating credit unions determined that the ESSDL was profitable during the test period because (1) employers pay a nominal fee based on the number of employees participating in the program and (2) underwriting costs were significantly reduced.

• ESSDL outperformed financial projections, with reported loss rates ranging from 2 to 3% during the first two phases of product testing.

• Participating credit unions reported that the program is seen as a valuable community service.