Banks, credit unions or other financial institutions often enter into loan-participation agreements with local businesses and may offer loans to loans such as a kind of short-term investment or bridge financing. A equity loan (LPN) is a fixed-rate guarantee that allows investors to purchase portions of an outstanding loan or set of loans. LPN holders participate in proportion to interest recovery and repayments and are similarly exposed to a risk of proportional default. The principles of cooperation of credit unions include: voluntary membership, democratic organisation, economic participation of all members, autonomy, education and training of members, cooperation and participation of the Community. In order to meet the needs of local borrowers and increase credit revenues, many community banks use loan-participation agreements in which one or more banks participate in the ownership of a loan. Community banks have also formed credit consortia. For example, the Community Investment Corporation of North Carolina (CICNC), a consortium of affordable residential real estate loans, provides long-term sustainable financing for the development of multi-family housing and low- and middle-income seniors in North and South Carolina. One of the goals of borrowing is to help meet the needs of borrowers in a local community. Several other institutions have also emerged for similar reasons. Credit unions are an example. A credit union is a financial cooperative formed, owned and operated by its participants.
While some credit unions may be large and national, such as the Navy Federal Credit Union (NFCU), others are smaller. For example, Angel V. Castro, a pioneer of the Latin American credit union movement, was recently recognized for his efforts by the National Credit Union Foundation. Castro believed that the traditional U.S. model of poverty reduction based on consumer credit would not meet the needs of the communities he worked with. In Ecuador, he focused on organizing credit unions that extended access to credit for their members, particularly for agriculture and other efforts. Credit unions and banks generally offer the same services, including the acceptance of deposits, loans originally to individuals or small businesses, and the provision of financial products such as credit and debit cards and certificates of deposit (CD). However, the major structural differences are the way in which a commercial bank and a credit union exploit their profits.