Credit unions and their affiliates are the perfect partners for entrepreneurs and small businesses when they need financing, as nearly all do at some point.
Credit union lending to members for business purposes continues to be a fast-growing segment of the industry, up 9.2% through the first three quarters of 2013, said Patrick Keefe, senior vice president of communications for the Credit Union National Association (CUNA) in Washington, D.C. In nearly all cases, the small business owner must be a credit union member and the average loan size is $212,000.
Bethpage Federal Credit Union, New York state’s largest credit union, recently announced a new division to work with local businesses in Nassau and Suffolk counties, according to Kirk Kordeleski, President and CEO of Bethpage. Called the Bethpage Business Banking Group, the new entity is comprised of three teams of experts with broad-based experience in commercial lending and cash management solutions.
The group focuses on key vertical business segments including the healthcare/medical arena, professional service firms, wholesalers, distributors and non-for-profit organizations, Kordeleski said. The teams will work in Bethpage branches across Long Island. Bethpage’s business banking portfolio currently includes more than 5,000 business accounts and $230 million in deposits.
The Wisconsin Credit Union League stated in its 2013-14 Scorecard that Wisconsin credit unions are “ready, willing and able to help small businesses expand, hire, and grow.” The 2013-14 Scorecard reported Wisconsin credit unions have more than $2.7 billion in business loans on their books as of September 2013. The average loan was $178,455. It points out that at the start of the Great Recession in December 2007, Wisconsin credit unions had $1.5 billion in business loans on their books. Since then, business lending made by state credit unions has increased by 73% while loans made by Wisconsin banks increased by 1.5%, according to the League’s analysis.
A credit union can be the lifeline for an entrepreneur. CUNA’s Keefe offers the example freelance photographer Tom Hoebbel of Brooktondale, N.Y., owner of Thomas Hoebbel Photo-Video.
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When it was time to upgrade his equipment to move into the Internet age, he decided to work with his local credit union instead of the neighborhood bank. Hoebbel had been a credit union member for years because of its free business checking services. Hoebbel was most impressed by the committment of the credit union manager, who helped him secure the $25,000 loan from the Small Business Administration he needed to expand his online video services.
Many credit unions nationally are supporting retailers with Shop Main Street, a rewards program for retail customers from RewardsNOW, Inc.
"The Shop Main Street rewards program is a winner in every respect,” said Stan Hollen, President/CEO, CO-OP Financial Services, a credit union service organization based in Rancho Cucamonga, Calif.. “It all adds up to creating a sense of community, with a program that keeps local dollars in the local economy.”
Participating merchants can create offers via an online management tool and are also provided with marketing material to promote Shop Main Street in their establishments, including store posters and window stickers, on their websites and via social media.
In Michigan, more than 50 credit unions have used cash mobs to support small businesses, bolstered by the recent success of a statewide event dubbed CU Lunch Local, according to Michigan Business Connection LLC, a commercial lending CUSO, and Michigan CU Capital, an entity that provides channels for credit unions to serve their members’ small business lending needs. An example is the $92-million NuPath Community Credit Union in Wyandotte, Mich., that approached a local restaurant near its branches to work with the owner to provide co-branded coupons for the credit union’s employees during the CU Lunch Local event.
Other credit unions have also sponsored cash mobs, including Ohio Health Care Federal Credit Union of Dublin, Ohio, and ORNL Federal Credit Union of Oak Ridge, Tenn. Cash mobs have become so popular they have their own web site.
While banks may seem like an obvious choice, credit unions are an increasingly important funding source for small businesses that provide other forms of assistance to help businesses expand and get entrepreneurs off the ground.