Member Business Loans from Your Local Credit Union
By Cyndi Cohen Credit Unions Online
Congress may be stalling in their efforts to increase the member business lending cap, but that doesn’t mean your local credit union doesn’t offer business loans and other services to suit your company’s needs.
Are you a business owner? Are you a credit union member? If you answered ‘yes’ to both of these questions, then you’re in luck! By choosing to be part of a financial co-op, you have been given the gift of an instant business partner. Your credit union wants to help your business succeed and is putting the convenient, affordable resources and tools right in your hands, to make that happen.
No longer serving just employee groups or even individuals, credit unions also offer all types of businesses, large and small, everything from basic accounts to business debit cards to commercial lending options. And, in keeping with the true Credit Union philosophy, credit unions are serving up superior member service and personal attention along with their business services.
Member Business Loan Basics
Redwood Credit Union (Santa Rosa, CA) offers a full suite of business services, including checking and savings accounts, loans and credit cards, merchant and payroll services, insurance and more. In addition, the credit union, an SBA Preferred Lender, offers a variety of member business loans, including commercial real estate loans, term loans, credit cards, lines of credit, and SBA loans (504 and 7a).
According to Michael Downey, Senior Vice President of Business Services, Redwood CU began offering business services in 2004 in response to requests from many of their members who were also small business owners and wanted to have their business accounts at the same institution where they did their personal banking. “We did our first business loan in 2005, and in 2008, we added SBA 504 and 7a loans to our product offerings - we have consistently been ranked among the top local SBA lenders in the San Francisco Bay Area ever since.”
Funding over $130 million in business loans to date, Downey says that they have received very positive feedback from members about their business services and business lending. Business owners interested in applying for a business loan from Redwood CU can download the application from the website or work with a representative at a branch to complete the application process.
In addition to the completed application, Redwood CU generally requests the following documents:
A personal financial statement
A schedule of business debt
The past three years’ tax returns (both business and personal)
And, in the spirit of People Helping People, they also want to know each person’s story and their goals. “If your business weathered the economic downturn, it is no accident — you’ve got a compelling story of how you’ve survived the recent economy, and a vision for the future. It is important that your financial services provider understands your business, but it is even more important that they know that you understand your business,” explains Downey. He says that for business owners, sticking to what they know and what they do best will improve their likelihood of obtaining financing.
Arizona State Credit Union (Phoenix, AZ) offers a variety of deposit products, including checking and savings accounts that can support both large and small businesses. They also offer credit cards, operating lines of credit, and equipment and real estate loans. According to Paul Stull, Senior Vice President of Strategy and Brand, business lending began in 2006 and was well accepted by members. Today, the credit union’s loan portfolio has nearly $130 million in business loans.
Business loan applications are handled by business lending officers. Generally, financial statements, tax returns and other documentation that demonstrates a track record of success over several years are required. “Statements of the business owner’s financial strength, marketing or business plans, and other materials that support both the strength of the business and its owners, may also be requested,” explains Stull.
Freedom Credit Union (Warminster, PA) offers Secured and Unsecured Installment Term Loans and Lines-of-Credit for working capital, equipment financing or many other needs; up to 100% financing for Business Vehicle Loans, as well as Real Estate Loans for Business or Investment properties.
According to Ryan Keene, Member Services Supervisor in Lending, 2012 is the 3rd year that Freedom has offered business loans to its members. “While the product is still relatively new, each year the credit union has seen an increased interest from the membership regarding Business Lending,” says Keene.
Business members can apply over the phone with a Member Service Representative, or by stopping into any Freedom CU branch. The credit union requires the business member to provide a minimum of 3 years’ tax returns for the business, as well as any individual who will be on the loan. Also, all borrowers will be required to complete a loan application and personal financial statement at time of application.
Why Choose a Credit Union for Your Business Loan?
In general, credit unions offer great value and service to those who live and work in their communities because their focus is service and not profit. This motto translates well to serving the needs of businesses.
At Redwood CU they feel that as community-based cooperatives, credit unions are uniquely qualified to serve the needs of smaller local businesses that might otherwise find it difficult to obtain funding…because credit unions are for people, not profit, they want to assist all community businesses with their financial needs, regardless of their size. “Business owners should always work with the lender who can best meet their needs - in many cases that may be a local credit union or community bank, but it’s wise for business owners to research and review their options, as each situation is unique,” says Downey.
Arizona State Credit Union recognizes that for many small businesses, banks are not really an option as they are too small for a bank to have any interest. “Sometimes credit unions may be uniquely able to understand a business or a community where the business is located and, because of this, be willing to make a loan when a bank is not,” says Stull. Knowing your borrower and your community are imperative to success in business lending.
At Freedom, they are constantly reinvesting their profits back into the credit union, while the main concern of most commercial banks is pleasing their shareholders. “Business members know that the money they put into the credit union comes back to them in the form of lower interest rates, low-cost products and innovative account services,” says Keene.
Credit Unions Keep Main Street Bustling
In this current economy, credit unions have helped to keep small businesses alive and well, which is important to communities throughout the country.
Downey explains how small businesses are the cornerstones of local economies and credit unions can assist these businesses in restructuring their balance sheets, consolidating debt and obtaining financing for future growth and sustainability.
Stull says that business lending can be a great complement to other lending services offered by a credit union. Since many credit union members already have small businesses, being able to work with people they already know is a great benefit.
“The current low real estate values combined with historically low interest rates present a
once-in-a-lifetime opportunity for business owners to acquire commercial real estate,” contends Downey. Credit unions can work closely with their Members to help them take advantage of this opportunity.
In order to raise awareness and help keep local business owners in the loop about CU lending programs, many credit unions are promoting their business services year-round through print ads, billboards, online campaigns, radio, and other media. Some CUs will even offer limited-time incentives such as Red Wood’s $500-$1,000 discount on commercial loan fees, or Freedom’s Business Referral offer in which both the new and existing members receive $75 when a new Business member is referred to the credit union.
“Credit unions can help small businesses to grow, create jobs and restore economic vitality to their local communities,” says Stull. To find out how your credit union can help your business, check out their website or contact the Lending Department. If you’re not a CU member, but would like to belong to a financial institution that supports the global economy by helping businesses of all sizes flourish, find a credit union and join today.