For the most recent edition of Callahan & Associates' CUSO Guide, Networks & Niches, we sat down with three regional MBL CUSO CEOs to discuss their perspectives on the current marketplace. The full roundtable conversation with Bill Beardsley of Michigan Business Connection, Kathie Stone of East Coast Business Lenders, and Jack Pollihan of Heartland Business Services can be found in the Spring 2009 edition of Networks & Niches.
Has the current economic environment changed the outlook of your credit union clients on member business lending?
Bill Beardsley, Michigan Business Connection: We're seeing great opportunities. At the same time, we have recommended, and our credit unions are certainly showing indications that they want to fund good opportunities, but they want to fund them with smaller increments to diversify the risk associated with the present marketplace. Almost 80 percent of the transactions that come through the CUSO end up being shared by more than one institution.
Kathie Stone, East Coast Business Lenders: The credit union owners are basically new to the game in member business lending. It's been an education for them. From the onset, they all wanted to diversify and take smaller pieces in different elements of member business lending to one member. They're very cognizant of the risk, educated by their own senior management as well as myself, for that diversification.
Jack Pollihan, Heartland Business Services: Not all of our 18 owners are actively going out seeking business loans, and they don’t have people out on the street marketing the business loans. Some of the smaller credit unions are more involved in just participating in the larger deals generated by the larger credit unions. It allows even the small credit unions to diversify their portfolios and get involved.
What will it take for credit unions to achieve some breakthrough success in business lending? Can credit unions capitalize on the current economic environment?
BB: There are so many opportunities today. Really, it's developing a culture that will create success in business services, specifically commercial lending. Every day in every branch in the credit union system, a self-employed business owner walks in and is not identified with their business. If credit unions start anywhere, that is the place to start – their own branch lobbies.
The indicators that this member is actually affiliated with a business entity are all around them. Just training their member service staff to recognize it and know what to do with it when they see it would be a huge breakthrough.
KS: The surrounding community has to understand the credit union offers member business lending. We aren't there yet, at least in our area.
JP: The credit unions need to understand what a true commitment is to the lending product and know how those relationships work with business lending.
The ability to network your own employees or your own members for business professionals that they work with is key. Then, contacting them and getting them involved and just being in the community at different groups, chambers of commerce or other organizations. And getting that crucial information out to the business owners that, yes, the credit unions have these services and they're every bit as good as the banks are at doing it.