Members of the 400-strong North London Enterprise Club, which consists mainly of newly started micro-businesses, will be asked to invest a minimum of pounds 10 a month. They will subsequently be able to apply for loans, at a maximum interest rate of 1 per cent per month, which gives an APR of 12.68 per cent.
'We believe that we're the first business club to start a credit union,' said Barry Epstein, a spokesman for the group.
The credit union will start healthily in surplus thanks to a pounds 30,000 gift from the North London Training and Enterprise Council.
In Britain, the credit union idea has has taken a strong hold in recent years, with more than 400 such bodies already established. Many new groups are based in inner-city estates where traditional banking facilities are poor.
Credit unions are self-run on a democratic basis by their members, subject to the tight controls of the Credit Union Act of 1979. Supporters of the concept say that credit unions offer a cheap alternative to other sources of loans and encourage prudent money management.
Each credit union admits only members who share a 'common bond'. This could, for example be residence in the same locality or employment with the same company.
'Our common bond is membership of the Enterprise Club, which is open to businesses in the boroughs of Barnet, Enfield and Haringey,' Mr Epstein said.