Yes, old school thinking relied on arguments like these:
- Credit unions will never be able to “out bank” a bank. Banks’ commercial lending ability is greater due to sheer volume.
- Credit union culture is commercial-lending risk averse. We value our members and wouldn’t do anything to lose their trust.
- Commercial loans take too many man-hours to process and we can’t see the ROI on spending that much time with loan paperwork.
Welcome to 2018! Let’s talk about why credit unions SHOULD welcome their members’ small business loan requests:
- Your trusted relationship with members goes a very long way. Use it to your advantage.
- A business loan could be the “stickiest” product you offer.
- With the right partner, an online business loan approval takes minutes, not weeks.
- Commercial loans can be a credit union’s most profitable product in their lending portfolio.
Members bank with a credit union for many reasons, and those reasons are also why they should offer, even entice, members to apply for a business loan. Lower rates and fees, personalized service, and a sense of community are not things big banks are known for. Opening a business is a huge risk, and it will go a long way for that person to know that their local credit union is behind them. It’s a win-win for the whole community.
Baby boomers are less likely to start their own business, but millennials are starting more companies, managing bigger staffs, and even hoping to make the world a better place in the process. The next “Uber” CEO will not likely walk into your credit union asking for a loan, but there are a lot of smart, young entrepreneurs out there hoping for a break that might not come from a big bank.
Find your “sweet spot” in the business-lending world. Remember you’re not competing with the big banks in this space. Small business loans between $5,000 and $250,000 are just the ticket. Banks will not target these requests, but credit unions can be the real heroes here and not cause staff any undue stress in the process.
If a CEO’s first thought when contemplating a small business loan program is, “I need to hire more staff” then she is doing it wrong. FinTech is here to stay… and to make the lives of credit union employees so much easier. Specifically in the world of small business lending, financial technologies, such as those offered by Lucro Commercial Solutions, are revolutionizing credit union business lending.
Lucro’s Digital Business Lending Center is the technology by which credit unions can safely and easily offer their members small business loans. Lucro CEO, Jim Gallagher said, “Offering small business loans to members and potential members should be as natural as offering auto and home loans. We’ve made business lending simple, cost effective, and a way for credit unions to connect even deeper with their members and communities.”
Offering small business loans doesn’t have to be daunting or risky, as long as you do your homework, find the right partners, and maintain the credit union philosophy of people helping people.
Take this opportunity to corner the market on your town’s next corner market.