Member Business Lending is Much More Than That
Across the United States, small business is anything but “small” business. According to the U.S. Small Business Administration (SBA), small businesses (defined as businesses with fewer than 500 employees) account for over 99% of all American businesses and close to sixty million employees.
As existing small businesses continue searching for ways to grow and prosper, an ever- growing number of small startups are entering the marketplace. A common denominator amongst many small business owners is the need for access to reliable and consumer-friendly business services, especially business loans. Increasingly, traditional big bank lenders close doors and tighten screws on the business lending process, making it more difficult for these entrepreneurs to access the funds they need to flourish and help fuel the overall American economy. Regulatory burdens and ever-increasing red tape can also strangle the small business lending process for consumers.
It is for these businesses, many of which are run out of home offices or smaller retail shops, that credit unions can step up and provide critically needed business lending services and loans. Without the assistance from credit unions, small business owners will turn to other financial institutions for services and loans, often to their own detriment financially, and certainly at a loss to those credit unions not actively trying to secure this important niche of local business. After all, credit unions’ commitment to serving local communities sets them apart from other financial institutions, making them an ideal fit for small businesses’ financial services and needs.
Business loans that are secured by the SBA offer less risk to the lender throughout the life of the loan. Credit unions should also look at business lending as an excellent “sticky product” with which to deepen relationships with business members. For example, with a progressive brand and a solution-centric member culture, credit unions working to serve members with business loans have an ideal opportunity to cross-sell other products and services, such as credit cards, bill pay, vehicle loans, checking accounts, etc.
Members with credit union products and services are much more likely to remain with their credit union for longer periods of time due to the deeper nature of this enhanced relationship. The importance and relevance of certain key credit union growth metrics, including products per member and products per household, becomes even more important when working with business lending members.
Credit unions that actively participate with (and promote) business lending services and loans help empower the growth not only of their own bottom line, but also that of the small business owners/members in the communities they serve, and on a larger scale, the American economy. When approached from this perspective, the importance of credit union participation in business services and business loans is readily apparent. Credit unions that step up their business lending services embody the very spirit of the credit union movement and philosophy; that of people helping people and economic prosperity for all.
Member Business Lending (MBL) is a credit union service organization (CUSO) established in 2004 which has built a strong reputation among regulators and credit unions for their commercial lending and SBA lending expertise and efficiencies.