Business lending has been growing for a while at credit unions, but at the Tukwila, Wash.-based Boeing Employees Credit Union, it's booming. And it has made it happen largely by tackling a limitation common among credit unions when it comes to business lending: Fear.
Business lending at credit unions has been growing by double digits annually since 2013, according to the latest data from the NCUA. A little more than 36% of all credit unions now offer business loans, up from about 29% in 2009, and 7.4% of all credit union loans are now business loans.
But for many credit unions, business loans are still a relatively untapped resource. Of the credit unions that offer business loans, just 0.3% of members get them – a rate that hasn't changed for at least the last six years.
In just about four years, however, the $14.5 billion BECU, which has more than 950,000 members, has managed to grow its business loans from about $66 million in 2012 to about $415 million. It now has 37,000 business members and business deposits are growing at 22% a year.
That's according to Vice President of Business and Wealth Services Dana Gray, who is the chief driver of BECU's sprint into business lending. Gray joined BECU in 2012, when the credit union had about 24,000 business members, as well as a basic business lending program that had been in place since around 2004. The unit had been operating without a growth focus for a number of years, but management knew there was a strong potential to re-tool and reinvest in their business members.
“We knew we had a strong business member population, and didn't feel that we were giving them the attention they deserved,” Gray recalled.
Gray sent surveys to BECU employees, as well as to about 14,000 business members. One of the biggest findings: Employees were intimidated by business members and nervous about talking about business products. When business members did say something, employees weren't sure what to do, because they were unfamiliar with BECU's business products, she added.
The opportunity was clear, so Gray spearheaded the creation of a series of four online classes for employees. The required classes covered topics such as business deposit products, business credit cards, business loan products and how to make an effective referral. They were 20 to 30 minutes each and followed by an all-day classroom session aimed at helping employees understand the life cycle of business members, as well as their payment needs, Gray said.
“They really learned how to speak to the business member,” she noted.
Next came the business specialists. Gray hired four (there are five today), and each supported seven to 10 BECU neighborhood financial centers. She calls it the best part of the strategy to boost business lending.
The changes may sound simple, but they haven't all come easily.
“One of the early mistakes that I almost made was my enthusiasm for growing this line of business may have been slightly ahead of our own internal capabilities to support it,” she said.
Read more about BECU's business lending strategy in the March 16, 2016 print issue of Credit Union Times.
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