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Short-term lending can benefit credit unions and their members in several ways. While multiple pluses are generally a good thing, it can make measuring the success of your credit union’s small dollar loan program difficult. Fortunately, that’s a good problem to have.

Every credit union is a little different. They operate in different locals, attract different clients, and specialize in different services.

Similarly, each credit union might implement a small dollar loan program for a different reason. In this blog, we’ll explore how measuring a lending program’s success changes depending on its primary goal.

Identify Your Small Dollar Loan Program Goal

Your first step to measuring the success of your credit union’s small dollar loan program is to identify your primary goal.

For example, your primary goal might be one of the following:

  • Member services: provide a safety net or better loan options for your financially at-risk members
  • Credit union growth: gain part of the market share of nearby short-term lenders
  • Increase revenue: broaden loan portfolio to improve your bottom line

You may have another goal in mind as well. Whatever your primary goal is, pay most attention to metrics related to that benefit.

Measure the Success of Your Primary Objective

It may sound obvious, but it’s worth repeating: the best measure of your success if whether you’ve met your goals.

Often, programs with multiple benefits can sidetrack even the most focused of us. Be wary of using secondary benefits as a measurement of your success. Focusing is tricky because usually, credit unions implement small dollar loan programs to achieve several objectives. However, emphasizing one objective at a time might yield better results.

Why Focus on One at a Time?

It’s easy to see success in one area and say, “hey, this is working!” And then double down on the most successful area.

Certainly, that strategy will work. However, will it work for your credit union?

If you implement a small dollar loan program to expand your loan portfolio, then you probably chose that goal for a reason. Specifically, you and your board decided that you needed to increase your revenue.

Although you may increase your revenue by gaining new members and by providing options for your financially at-risk members, it’s a pyrrhic victory if you’re not making any money. It’s definitely a defeat if you’ve lost money.

Double Down on Your Objective

If you’re not seeing success in your primary objective, don’t give up. Credit union small dollar loan programs confer numerous benefits, but they aren’t always immediate.

If you don’t get the results you want from your program, consider revising your strategy. If the goal you haven’t met is increased revenue, then ask yourself:

  • How can we increase our revenue from these loans?
  • What is keeping us from success?

Just remember, although credit union small dollar loan programs offer multiple benefits, managing your goals against each other might be a balancing act.

For example, if your goal is increased revenue, it may be worth it to increase your loan rates. While increased rates might make your service less attractive to your at-risk members—and to prospective members who might join for your loan service—it will be better for your bottom line.

The Final Word

By no means do we suggest evaluating the success of your credit union’s small dollar loan program on only one metric. However, it’s important to remember that the best way to measure your program’s success is by ask, “does it have the intended effect?”

If it doesn’t, it may still be worth keeping around because of its ancillary effects. Also, you can revise your loan program to better accommodate your objectives.

If you’d like to learn more about credit union payday loan alternative programs, follow the link below. Or, download our Member Crisis Guide to see how small dollar loans can help members out in emergencies.


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