Currently more than half of all U.S. sales come from the 28 million small businesses in this country. As a growing tech and startup scene, Baltimore is swiftly becoming an incubator for small business and entrepreneurs. And one thing all smallbusinesses have in common: every good business plan requires funding.
For small businesses, lenders like credit unions are increasingly their biggest allies. Traditional banks are cautious to lend to small businesses while alternative lenders are costly and risky. According to the National Association of Federal Credit Unions, credit union member business loans have grown 60% since 2008.
And because credit unions are member-owned and not-for-profit, they return profits back to members in the form of lower fees and competitive interest rates. This means credit unions are a low-cost solution for those looking to start their own business. That savings translates into lower checking fees, higher yield deposit accounts and better commercial real estate rates.
Positioned as community and mission-driven lenders, credit unions are less bureaucratic, more flexible in loanrequirements and offer greater discretion in the underwriting process. Small business lending is largely relationship based and requires knowledge of the local market. Because of this, the service an applicant receives with a credit union throughout the process is supportive and personalized.
Credit unions maintain strong, deep roots within the communities they serve. Because they typically serve a specific community; therefore they’re banking on the economic success of local, small businesses. It’s in everyone’s best interest for a business operating purposefully in the community to succeed, and a credit union’s investment in the financial health of its community is nurturing for entrepreneurs. This relationship is ideal for those, years later, still lacking confidence in big, National banks.
Credit unions are a great way to jump-start a small business. The average member business loan among Maryland credit unions is $215,394 (source: CUNA); but credit unions are also a great resource for micro-loans (under $50,000) to assist a business owner in expanding or renovating their physical space, increasing inventory, procuring new equipment or looking for supplemental capital.
Many credit unions offer programs to foster economic development within the community, specifically for women and minority-owned businesses. Earlier this year, the Small Business Administration signed an agreement with the National Credit Union Association to support lending programs and meet the needs of those underserved by traditional banks. This has expanded the resources for credit unions to best serve small businesses.
The good news continues. Maryland credit unions are well below the lending cap of member business loans. This means there is significant untapped capital available to those who qualify. (By law, a credit union’s business loans cannot exceed 12.25 percent of its assets. Currently, credit unions are pushing congress to raise that cap to 27.5 percent to allow for institutions to make more business loans.)
For anyone starting a small business or hitting funding roadblocks, consider your options. Finding the right banking relationship that supports you and meets your business’ needs is the key to startup success. The credit union down the road could just be your best partner.
Author : Tricia Brice
Tricia is the Senior Vice President, Chief Lending Officer at Point Breeze Credit Union. Based in Hunt Valley, Md., Point Breeze serves more than 51,000 members and 500 employer groups through the Baltimore area offering competitive and supportive financial services for consumers and businesses.
About Point Breeze Credit Union
Point Breeze Credit Union is a member-owned, not-for-profit financial cooperative serving more than 51,000 members and over 500 employer groups. The growing credit union, with total assets exceeding $750 million, currently has offices in Hunt Valley, Rosedale and Bel Air and plans for expansion into Westminster in 2016 and Owings Mills in 2017. Members also have access to over 5,000 shared branch locations across the United States. Individuals who work, worship or volunteer within 20 miles of a Point Breeze location are eligible to join. Point Breeze offers consumer and business checking, savings and loan services. Federally Insured by NCUA. Equal Housing Opportunity. For more information, please visit www.pbcu.com.