Note: In 2020, the pandemic pushed National Small Business Week into September, and like everything else, the event was virtual. It’s unclear when small businesses will be honored in 2021.
I always felt that there was a terrible catch-22 in the business world. When times are good and your finances are strong, getting a loan is easy. But it’s usually not when you need help.
For credit unions, underwriting has always been focused – in good times and in downturns – on the big picture of a person or business – not just a current snapshot.
We want to find solutions and will look for ways to say “yes”. We’re not just going to look at your current finances – not during a pandemic. Not just anytime. We will look at your financial history and your future potential.
If you were successful before the pandemic, we are likely to believe that you can be successful after the pandemic. Our intention is always to find a solution. We want to say yes. This is the entrepreneurial and dynamic spirit that I look forward to being a part of when Sharonview Federal Credit Union launches its business services unit later this year.
When the big banks said no
Years ago, when I was working for what is now the Canvas Credit Union in Denver, Colorado, we gave a loan to a manufacturing company that made a children’s toy. This company had the opportunity to acquire another company which produced a similar product. But with the tightening of the credit underwriting matrix, they were rejected by Three banks before they are referred to us.
We reviewed their history of growth and their success in launching new divisions and new product lines. They started to make a product. Now they had five products and wanted to acquire a company that had similar products and were adding more.
We have seen their successes in marketing, in operations, in distribution. A merger would allow them to reduce some of their costs and the addition of new product lines would offer them growth opportunities.
In the six months following the amalgamation of these companies, the merged company’s new toy sales increased by 27% and accounted for almost 20% of their total revenue.
If they had not found us, they would have lost this opportunity. They should also have laid off a large percentage of their workforce. So not only did we help a local business grow, but we were also able to save 22 jobs. In this case, we have served our member and our community.
What’s your story?
I think back to 2008 and 2009 when the economy was in freefall, and I was still in Denver. I know how vital small businesses are to our global economy. “Small businesses are the lifeblood of the US economy,” read a 2019 SBA press release. “They create two-thirds of net new jobs and drive innovation and competitiveness in the United States.”
I felt it was important for our credit union to play a role in reviving our economy. We had a bias to say yes when it was not conventional wisdom. It’s a common misconception among credit unions – and one thing that separates credit unions from big banks. We want to hear your story, the story of your business. And we will take the time to hear it.
A credit union – our primary focus being to serve small business owners and the communities in which we live and work – is an ideal financial partner for a small business owner.
Small business owners are relationship-oriented just like us. The relation is all. All of our lending decisions are made locally. We get to know the business owner – not just during the loan process, but later. In real life. We are able to see what they are doing, touch what they are making, and purchase their product or service.
We are very committed to managing our commercial accounts. We don’t just want to be your lender or maintain your checking account. We want to be your customer. At my Denver credit union, we actually created a directory for our internal use so that employees know who our members are and what services they provide.
If our employees needed a dry cleaner, mechanic, or cafe, we wanted them to know which of our members were providing those services. When I needed any of these things, I would always go to our members.
When I wanted a good beer, I made sure to enjoy it at the microbrewery we were helping fund. I was delighted to see the manufacturing equipment that we helped them purchase. It is the personal and individual service that a credit union can provide.
It’s something I can see us doing in Sharonview too. And I would love to see how it is received in our organization and our community.
Your best interests at heart
Often, the help requested by the business owner does not match we – as a financial institution – thinks he’s right. Because we take a consultative approach, we can say: we think this may be a better solution for you.
An SBA loan is one of the tools in our toolkit. And in my experience, credit unions do very well with SBA loans. The SBA loan program is there to provide loans to small business owners that cannot be approved anywhere else. SBA loans are one of the ways we have to say yes. When there are collateral gaps, an SBA loan should be an obvious consideration.
In my experience, credit unions try to give small business members a few options when we can and then let the borrower decide which direction they would like to go.
The range of products that credit unions have to offer small businesses are very attractive. At the two recently acquired branches of Sharonview, we offer free chequing accounts for small businesses, including a paid account. And soon, these products and more will also be offered at our other 17 locations.
Historically, credit unions have also offered the best loan rates. It is more money for an entrepreneur to reinvest in the management of his business.
Credit unions seek to have interactions – not just transactions. And that’s generally the philosophy of small business owners. We are a great team.
Herb White is Loan Director at the $ 1.77 billion Sharonview Federal Credit Union based in Indian Land, SC