Rhode Island Credit Unions Forge Ahead with SBA Lending Programs; Not Backing Down to Established Banking Programs

PROVIDENCE, R.I. – From the veterans to the newly-established, U.S. Small Business Administration lending programs at Rhode Island credit unions are holding their own against local banks as they carve out a niche that emphasizes hand-holding and intimate service. Recent top 20 rankings here from the SBA are encouraging as the industry continues to make inroads into the newest loan offering slowly chipping away at what some say is the administrative and compliance stigma attached to it. At $225 million Coastway Credit Union, SBA lending has proved to be a solid cog in the wheel since the first loan approval nearly eight years ago. Today, it has close to 200 hundred loans on the books totaling $20 million, said Bill White, president/CEO. Those figures have propelled Coastway to the fourth largest SBA lender in the state, surrounded by a sea of large banks including recently-acquired Fleet Bank, which holds the sixth spot. White said of Coastway’s 30,000 members, more than a thousand are small business owners. The credit union has SBA certified and preferred lender status, which helps members get a loan decision determined in a day. What also helped Coastway’s fledgling SBA program in the early days was having a former SBA staffer come work at the credit union, White said. “That’s the key to success – find experienced personnel who understand the business lines, know how to put the loan together, can look at details quickly and determine upfront if there are enough strong points to move forward,” White said. Coastway has four lending professionals on board who came from the banking industry. Another factor that has contributed to the SBA program’s growth is building a reputation over the years with accountants and attorneys, who often refer clients to Coastway for the loans, White said. “This is reputation building business,” he said, adding that Coastway sees loan applicants from all walks of life including at the start-up phase to companies that have been around for years. “We’re looking to have another great year,” White said. “We don’t use the SBA as a crutch to make a bad loan good, we use it to make a good loan better.” Greenwood Credit Union, ranked 14th in Rhode Island, launched its SBA program four years ago, said Albert Ferri, director of commercial lending. While it took a couple of years to approve its first loan, Ferri is confident that with time, word of mouth can go a long way. “Once you start making the loans, other (business owners) tend to find out,” Ferri said. Greenwood has three loans on the books totaling $400,000. One loan for an ice cream product start-up company recently got approved and is nearing the closing stage. Two more applications were also recently processed. Ferri, who worked for a commercial bank for 20 years including processing and approving SBA loans before coming to the $215 million Greenwood CU, said banks continue to have a large share of the SBA market. The credit union has SBA’s general lender status meaning because it makes less than 15 loans each year, it has to apply to its local district office for loan approval, slowing down the process a bit. Ferri is quick to point out that their office is very supportive and receptive and that has helped move the loan application along. “It’s a process you have to keep up to date on,” Ferri said, who took several refresher courses through the National Association of Guaranteed Lenders. “It’s a learning curve. It’s an administrative-intensive program that requires additional attention to servicing the loan.” From the restaurant owner, start-up printing franchise and small consulting business applicants, all appreciated a common trait with Greenwood – the hand-holding, Ferri said. “Our last loan applicant was concerned that we had only made two loans,” Ferri recalled. “We told him the difference with us is that we will give you more personal attention, we will hold your hand versus a bank that (tends) to be cookie-cutter” the process. The newest kid on the SBA block is $208 million Coventry Credit Union, which launched its program in May, said Miriam Plitt, marketing director. Because many of its 30,398-member base own small businesses, Coventry included in its strategic plan a program to assist them. “The communities here are primarily small and as a credit union, we saw the need to get involved (with SBA lending),” Plitt said. So far, employees have undergone training sessions and a marketing campaign is in the works to make members and the community aware of Coventry’s newest offering. As for competing with banks, Plitt said it’s not even an issue. “The large banks have the corporations whereas the credit unions have market share with the smaller businesses,” she said. “It’s a niche we can serve.” Coventry is one of 12 Rhode Island financial institutions that have recently received approval to offer SBA loans. The state’s top SBA lending spot goes to Citizens Bank of Rhode Island with 518 loans totaling nearly $20 million as of May 31. [email protected]