CU Invests in Entrepreneurs’ Dreams  

Sugar, flour, perseverance and support from her local credit union have made Jennifer Colombo’s scone business and tea room a success.

Colombo started Just Delicious Scones 10 years ago with a $50 oven from Craigslist. What she didn’t have in her bank account she made up for in ambition and drive. She sold her car to pay her first month’s rent for the building she was leasing, and then sold her espresso machine to buy ingredients to make her first batch of scones.

Over the next three years, her business grew so much she had to move into a larger building. With the business growth came Colombo’s realization that she needed financing to accommodate it.

Colombo initially applied for financing at a bank, which seems to be the most common first choice for small business owners seeking a loan. The Federal Reserve Banks of New York, Cleveland and Richmond’s Small Business Credit Survey indicated small business owners still typically think of banks when applying for credit: 45% of small businesses surveyed apply to large banks for credit, 38% to small banks, 31% to online lenders and only 17% to credit unions.

However, even though small business owners often start at a bank, they’re not always satisfied with the experience. According to a satisfaction survey from the Federal Reserve Bank of New York, credit unions typically receive the highest or close to the highest lender satisfaction scores: 78% of applicants were satisfied with credit unions versus only 61% with large banks and 46% with CDFI lenders.

The survey results mirrored Colombo’s experience. She initially went to a bank, and had a less than stellar experience. She said she felt like they weren’t listening to her needs, was told she needed a co-signer for the loans, and left disenchanted by the whole ordeal.

Ultimately, Colombo went to the $389 million Christian Financial Credit Union in Roseville, Mich., to explore financing options.

Through Christian Financial, she was able to get two loans and a line of credit, allowing her to pay off her land contracts, open a second larger-sized kitchen and renovate her 1,000-square-foot tea room called the Royal Treat Tea Room, which is decorated with family heirlooms donated by members of her community.

“Having Christian Financial Credit Union come along and say I was something they wanted to invest in was a dream come true as a business owner,” Colombo said.

Colombo’s loan is part of a notable increase in credit union small business lending. While commercial banks have decreased their amount of small business lending, credit unions appear to be picking up the slack.

“In 2008, commercial banks had $780 billion in outstanding small business loans, versus only $559 billion today, a decrease of 28%. During that same time, credit union member business lending has more than doubled, growing 114% … and up almost 50% since 2003,” Jordan van Rijn, CUNA’s senior economist, said.

Van Rijn said over the past 10 years, the average credit union member business loan has totaled just $215,000. “The SBA considers a ‘small business loan’ to be any loan of under $1 million, so it’s safe to say that the vast majority of credit union member business loans are small business loans.”

This growth can be attributed to a few different things. “With increasing consolidation of the industry, the average credit union is larger today than in the past. Therefore, more credit unions may have the technology, administrative capacity and expertise to move into new areas of lending, such as business lending, that were more difficult to do previously,” van Rijn emphasized.

He went on to say that credit unions have also been looking for more ways to diversify their loan portfolios, and business lending is a natural way to do that.

Christian Financial is trying to do just that, and it seems to be working – its business lending has steadily grown during the past several years. At the beginning of 2014, the credit union had $40 million in business loans, and now has 270 outstanding business loans totaling $55 million, according to Chief Lending Officer Donna Anargyros. Anargyros also said the credit union lends to a wide variety of different types of businesses, keeping the credit union’s lending portfolio diversified.

Christian Financial has also expanded its ability to service larger loans by partnering with Michigan Business Connection, a CUSO that is partially owned by the credit union, Anargyros said. MBC shares the cost and risk of commercial loan management to offer the best commercial lending solutions to credit union members and communities.

Anargyros said if an individual borrower loan is too large for the credit union, Christian Financial can participate it out. “So now we’re sharing in the cost, we’re sharing in the risk. It gives credit unions in Michigan a unique opportunity to service some of these larger [loans].”

Christian Financial is also reaching people through its involvement in the local community. In fact, the credit union’s community involvement is the reason Colombo learned about the organization. “Their community activities and involvement are the reason I knew who they were. A lot of people I knew said they went there. It was what they had already done that had made me notice them,” Colombo said.

Every year in October, the credit union pays for staff to have lunch at one of the locally-owned restaurants as part of the credit union’s CU Lunch Local program, which allows credit union staff to get out in the community and stay engaged with local business owners.

The credit union also hosts an annual community dinner called CU@SOUP, which enables credit union members who are working toward entrepreneurship to pitch their business idea.

“Members and the surrounding community are invited to attend, listen and vote. Once the three selected businesses pitch their ideas, the room votes on the idea they like the best. The winner receives all the funds collected from ticket sales and the credit union provides a $1,000 grant. We have had some exciting winners and love to see them growing their business locally,” Anargyros said.

Christian Financial is expanding its reach even more through a recent partnership with Just Getting By, a social media movement and platform that showcases stories of financial hardship and provides resources for consumers who need help.

The Just Getting By movement started in 2015 when the Michigan Credit Union League was looking for an opportunity to make a difference in the lives of struggling Americans. From this idea, CU Solutions Group, on behalf of America’s Credit Unions, created a documentary called Just Getting By that tells the stories of real people and the financial challenges they’re facing.

The ultimate goal of the movement is for consumers to begin a conversation about financial hardship and remove the stigma associated with it, in order to empower people to seek the financial resources they need.

The next phase of the Just Getting By movement involves telling stories on social media about people who have overcome financial hardship – and that’s where Colombo’s story has come into play.

The Just Getting By team interviewed Colombo about how she went from owning that $50 Craigslist oven to running a successful business, all thanks to perseverance help from her local credit union. Her story is helping to inspire current and future business owners to realize their potential, while letting them know about the credit union resources available to them.

“Those are the stories we’re telling now with credit unions – those success stories that are going to help you feel like you can take that next step. Credit unions are going to be a great vehicle to allow them to get to that point,” Aaron Kluck, director of content marketing at CU Solutions Group, said.

Colombo said she couldn’t have done it without the support of her credit union and local community.

“That rags-to-riches thing, this gift of people that believed in me … I think this will help [people] see that a normal, average person can be a success with the support of a good financial institution,” she said.