Despite the Headlines, Business Lending Is Alive and Well

In spite of the headlines and the constant refrain on the evening news, business lending is alive and well in our community. Tip O’Neil, the former Speaker of the House, is often quoted as saying that all politics is local. The good news is the same goes for most business lending. While we are in a global marketplace, local financial institutions still play an important role in helping businesses grow and expand. Unfortunately, very few anticipated the financial meltdown on Wall Street. Many prognosticators said the handwriting has been lurking on their balance sheets for at least two years now. While the national credit markets came to a grinding halt, most credit unions and banks continued to make loans. The majority of our local financial institutions are in good shape. For example, at Workers’ Credit Union our loan-to-deposit ratio is excellent and has been for decades. The fundamentals of sound banking have not changed. While the credit union was founded almost 100 years ago, we have been making business loans for only two years. With more than $30 million in lending relationships, the decision to expand our product offerings has exceeded our expectations. I am often asked, especially given the challenging economic environment, what is the secret to our success? Not to disappoint you, but it really is doing business the old fashioned way. I, along with my two other colleagues and all the branch managers, are highly visible in the community. This networking allows us to let people know that we now offer a complete suite of business accounts and lending products. From this we have cultivated many new relationships and just as importantly-we’re giving back to the community. The meetings we attend our local community-based nonprofit events, which are regularly attended by civic-minded business leaders. During the past year I have served as an auctioneer for 27 nonprofit events, helping raise over $300,000 for important community causes. It is something I enjoy doing and it a great way to support the community. Building new relationships by being active in the local community has helped tremendously. In addition, we have worked closely with our existing 64,000 members, many who own businesses. This close relationship with the community helps us understand our members’ needs. We’re not in the business of transactional lending. It is truly about helping our members achieve their financial goals. I believe what sets us apart is our comprehensive approach to business lending. We take a look at the entire financial picture when putting together a loan package. First and foremost, it has to work for the member. It is that simple. We have walked away from many loans because it wasn’t in the borrowers’ best interest. Many small business members have taken advantage of what we call a “wrap strategy”-tying together a business line of credit and terms loans with a personal home equity loan. This comprehensive approach prevents the business owner from overextending themselves and allows us to maximize the number of products we sell. The goal is to be as flexible as possible. Because we know our members and the local market conditions, it allows us to make decisions that national or regional players aren’t in the position to make. This seamless and transparent approach to business lending has contributed to our success. While the national credit market came to a grinding halt we continued to make good, solid loans-and we continue to today. Whether it’s for equipment, commercial real estate or lines of operating credit, we have money to lend to businesses that have a good plan, a good product and good credit. It really is that simple. Now if it was only as simple to restore our collective confidence. What comes first, businesses investing in new initiatives and expansion or consumer demand? Generally, it is a combination of both. However, it is the business that innovates that will prosper in a challenging market.