Pentecostal Community Bank
What is a Community Bank?
A Community Bank is a profit sharing, democratically run financial co-operative which offers convenient savings and low interest loans to its members. The members own and manage their community bank themselves.
The three main aims of a Community Bank are:
- To encourage its members to save regularly.
- To provide loans to members at very low rates of interest.
- To provide members with help and support on managing their financial affairs (if required).
What are the benefits of a Community Bank?
- It's an easy and convenient way to save and borrow.
- It offers very low cost loans.
- Insurance at no direct cost.
- It's a way to learn new skills.
Community Banks can provide a focal point for a community by bringing people together, to work alongside each other for their own benefit and the benefit of the community as a whole.
The members make regular savings, as little or as much as they wish. These savings then form a common pool of money from which loans are made to members. When members have been saving for a certain period of time (usually about 12 weeks) they can apply for a loan from the pool. However, in cases of emergency, a community bank may reduce this period, with certain safeguards. Interest on the loan is usually charged at only 5% per month on the monthly reducing balance. 79.59% Annual Percentage Rate (APR). The interest charged on loans is the banks income.
The membership criteria of a community bank is called the "Common Bond" - something that applies to every member.
Community Banks welcome everybody from within the Common Bond regardless of income, employment status or age.
How much do I have to save? However much you can afford. Getting into the habit of saving regularly is more important than how much.
What’s the difference between dividends and interest?
Community banks pay a dividend instead of interest. The key difference is that dividends are not guaranteed. A community bank will only pay a dividend if there is a surplus after all operating costs have been covered.
How soon and how much can I borrow from the Community Bank?
Most community banks expect you to save regularly for about 12 weeks before being eligible for a loan. The loan amount will typically be related to your savings in some way. However, in emergencies, a community bank may reduce this waiting period, with appropriate safeguards in place. The amount you can borrow will depend on your needs, your ability to repay, and the bank’s policies.
Community Banks are authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Your business is private in the community bank because all members and Officers who have access to personal information must act in a confidential manner at all times.
There is a statutory requirement for community banks to have Fidelity Bond Insurance, which insures against fraud and theft. They are also members of The Financial Services Compensation Scheme which protects the interest of all members should the bank fail.
