5 ways credit unions can help save small businesses

We all have a favorite small business we’ve been rooting for this past year. For me, it’s Costello’s Travel Caffe, a unique breakfast and lunch spot founded and run by a family from Idaho. I always enjoyed both the food and the vibe, which included scenes from the father and son’s international travels playing on TVs.

But more than anything, Costello’s was about welcoming its neighbors and inviting them to sit and stay awhile. It was about building community.  

As a business owner myself, I can say it’s been a stressful year. But I also know we’re lucky—small businesses with revenue streams that rely on in-person interaction, like cafés, restaurants, theaters, retail outlets, and childcare centers, have fared far worse.

In fact, data collected from small businesses in October by the U.S. Census Bureau revealed that over 30% of small businesses still report that COVID is having a “large negative effect” on their business, with an additional 45% reporting a “moderate negative effect.” 

These numbers have improved since the Small Business Pulse survey was first conducted in early May—when over 51% of small businesses reported a “large negative effect”—but many small business owners are still struggling. They are now faced with the arduous task of navigating PPP loan forgiveness applications while the next coronavirus relief bill remains in limbo. 

Can credit unions do more to support the cherished businesses that define our neighborhoods and help our communities thrive?

For credit unions that offer business banking services, there might be new opportunities to bring small business members into the fold. According to a survey of 1,300 small business owners in the U.S. and Canada, conducted in December 2019 and again in June 2020, perceptions of their financial institution’s level of innovation and quality of customer service have significantly declined in 2020.

In fact, when asked, “Has your bank reached out to see how your business was doing?,” 57% of the small businesses surveyed said ‘”no,” with another 10% unsure. It seems to me that a little proactive outreach could go a long way. 

What else can you do to champion the needs of small businesses? Whether or not you offer business banking services, here is some food for thought:

  1. Share local business stories

We all know the power of storytelling. It’s a wonderful way to inspire empathy while bringing visibility to an important issue or cause. Now is the time to share the stories of your local businesses, whether they are members of your credit union or favorite lunch spots for your branch employees. Our clients OnPoint, Clearwater, and the CDFI Community Bank of the Bay all do a great job of highlighting and celebrating local businesses on their blog and in their social media channels.  

Credit unions can go a step beyond visibility and offer incentives for members to buy from local businesses. At the beginning of COVID, for example, our client Baton Rouge Telco launched #OperationTakeout, encouraging members to get takeout from featured restaurants for a chance to win a gift certificate. 

  1. Redirect sponsorship funds from in-person events

Whether or not you offer business banking services, it’s quite likely you have funds on hand that you would normally use to sponsor community events. Can you repurpose some of these funds to support local businesses? When one of our clients learned that a street fair they typically sponsor would be canceled, they decided to use the money to support three of their most needy member businesses, who all operate near one of their branches. 

  1. Buy local

In recent months, delivering a safe-as-possible branch experience to members has become paramount. But instead of ordering face masks, hand sanitizer and plexiglas barriers online, can you make it a priority to partner with local sources? It might be a bit more time-consuming and expensive to go this route, but the quality and support are usually better, and what a great way to walk the talk when it comes to supporting your local community? 

Our client Clearwater Credit Union partnered with a local seamstress to produce nearly 500 face masks for branch employees. With so many weddings and other events cancelled, the seamstress has seen a huge decline in business. She told Clearwater, “You have no idea what this means to me.” Not only is local sourcing aligned with credit union values, but it has the added benefit of giving you a story to tell.

  1. Partner with local businesses to help vulnerable employees

Over 60% of Americans don’t have $500 in savings, and finances are the biggest stress for most employees. When employees are stressed, business suffers. Can credit unions partner with local businesses to help their employees be more financially secure, and to increase profitability for the business and the credit union? 

In a word, yes. NorthCountry FCU partners with Rhino Foods to guarantee Rhino Foods employees same-day access to $1,000 for emergency needs. The advance is repaid through payroll deductions, and when the loan term is complete, that auto-deduction continues to go into a savings account at the credit union. Inspired by their work, my company PixelSpoke created a similar program for our employees.

  1. Partner with other local credit unions to offer small business relief grants

Many small business owners don’t want to go into more debt while facing such an uncertain future. That’s why here in Oregon, four credit unions, including our clients Trailhead and Point West, have teamed up to distribute relief grants, which qualified small businesses will not have to pay back. The Oregon Legislature and Governor set aside $5 million, asking these CDFIs to process the applications and issue the grants. The grants are intended for historically disadvantaged businesses across the state, with a focus on business owners who are Black, Indigenous, people of color, and/or women.

I have been hearing from my personal network that there are foundations and philanthropists all across America who want help getting grants or low-cost loans into the hands of businesses, and that they would love to partner with a financial institution that is embedded in the local community and has the know-how to get the funds disbursed.

I’ll keep rooting for Costello’s and all the other local gems that define and enrich my neighborhood. In the meantime, as you approach the 2021 planning season, keep in mind that supporting small businesses might not only help them weather the storm, but also help you come out stronger on the other end of it.

Cameron Madill

Cameron Madill

Cameron Madill is the CEO of PixelSpoke, a B Corp, worker-owned marketing agency that builds websites for credit unions and other impact-focused cooperatives. He is also the host of The ... Details