Business lending: Benefits and value proposition for credit unions
As competition for business lending from traditional and nontraditional sources continues to heat up, credit unions with an eye towards the future turn increasingly towards using a qualified Credit Union Service Organization (CUSO) to help with their member business lending needs. When implemented correctly, the partnership between the credit union and its CUSO can generate tremendous benefit and value for both the credit union and the members it serves.
While there are many ways to measure the value of a CUSO partnership for credit union, four main ideas are most relevant.
Business lending offers growth opportunities
If your credit union does not currently offer business lending and business services to members, it’s really missing the boat. Many of your members are small business owners and in need of cash and guidance when it comes to successfully operating those businesses. Obviously, not every credit union has the expertise on staff to help guide members through the potentially confusing world of business lending (more on this later). By partnering with a CUSO, your credit union avails itself of significant potential growth opportunity by tapping into the needs of business owning members. And these business only members, once served by your credit union, are more likely to turn to you for help in the future and develop a successful and mutually beneficial business relationship.
Sound policies and procedures are vital to a successful program
As mentioned above, business lending, particularly when it involves the Small Business Administration (SBA), is potentially confusing. The successful bedrock of any credit union member business lending and services program comes in sound policies and procedures. By teaming up with a CUSO and the wealth of experience they offer, your credit union now has quick access to existing and pre-proven policies and procedures to successfully implement its member business lending and business services program. Starting without this foundation is an invitation to fail.
Product diversification is important
Gone are the days when credit unions could rely on more conventional member loan products such as new and used vehicles, vehicle refinancing and even mortgages. To succeed in the new economy, credit unions must diversify their product offerings and reach out to the potentially rich member business lending and services market. By diversifying their offerings in this way, credit unions can build a more resilient product portfolio that is less dependent upon a handful of products and services. In this way, credit unions therefore also protect themselves from unforeseen future economic downturns and runaway regulation at the state and federal level.
Proper staffing and backup plans are essential
Again, a great deal of the success of a member business lending and services program comes down to the expertise of your staff. Many credit unions, for a variety of reasons, simply cannot afford to bring on staff with the high level of expertise required to administrate and implement successful member business lending and services programs. When they align themselves with a CUSO, however, credit unions are now partnered with precisely this type of staffing — specifically trained to handle member business lending in an expedited, efficient and courteous manner. Imagine the cost to your credit union if you chose to send one or several of your staff members through the schooling and training required to become truly proficient at member business lending. The cost-prohibitive nature of this, along with the staffing headaches involved, eloquently pointed to the amazing value proposition and benefits to credit unions of teaming up with a qualified CUSO.
For more information CUSOs and how credit unions can realize the benefits of partnering with them, contact Blake Marsh at (866) 4MBLLLC or bmarsh@mblllc.com.
