Credit Unions and Small Businesses: A Niche Market You May Be Overlooking

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Growing up in a very small village in Central Michigan, I learned quickly that small business owners and farmers were a strong part of the local economy and their impact on the world around us was more significant than I had ever thought.

This extends beyond my small town as well. Small businesses are the backbone of the American economy—they create jobs, foster our future by partnering with local schools, and stimulate economic growth. In recent years, their importance has been highlighted by their growing relationship with credit unions.

In my day-to-day as a Business Development Officer, I hear firsthand the ups, downs, struggles, and successes of our small business owners. There is always one common denominator that comes up: “I feel like I get nickeled and dimed at every turn.”

And really, they do. I review these businesses’ bank statements from some of the most common national banks you hear about every day. The amount of fee-charging they get hit with resembles your cell phone bill and is borderline criminal. Paired with the outrageous term loans they were nailed with when Covid hit, and no one would work with them to restructure their LOCs and it’s a recipe for financial downfall.

The perfect match

As credit unions, we have a very strong opportunity to start serving our local small businesses in a greater way—not only by saving them money on fees, but truly bringing back relationship banking again. As much as technology has progressed and people want convenience and ease with their banking needs, they also crave a human connection and want to feel like someone is in their corner.

Why credit unions? Because we are the underdogs with mighty hearts, just like them. Here are some reasons it is a viable and sustainable opportunity for your credit union:

Growth

Small businesses are the bread and butter of our economy. They create jobs, foster innovation, and are crucial to our local communities. According to the SBA/Fed, small businesses employ half the nation’s workforce and represent forty-four percent of America’s total GDP. A staggering number when you think of big-box retail and how prominent they are.

However, they have a larger footprint in our communities than we realize, and in turn, we see how much credit unions can affect those smaller businesses with their presence. With the “Support Local” mindset still being prominent post-pandemic, why not inverse the relationship and seek out small businesses to help them leverage their cash flow and offer potential opportunities for growth?

Community support

Much like credit unions, small businesses are highly involved in their communities. They often source goods and services locally, support community initiatives, and contribute to the vibrancy of neighborhoods by donating time, money, or resources. This local sense of belonging helps strengthen community bonds and builds a lasting relationship.

Pair up with one and tackle a local park clean up. If you see their name on an adopt-a-highway sign, call them and ask if you can send some folks to help. Our credit union offers a full day of PTO to go and support causes like this.

Understand their financial needs

Small businesses often face unique financing challenges. We see it day in and day out. Small businesses do everything they can to save a dollar here or a penny there. In the end, they need money to expand, grow, or even just a small line of credit to stay operational. They may require flexible loan terms, personalized service, and quick decision-making.

Credit unions, with their emphasis on member service and community involvement, are positioned to meet these needs. We look at the larger picture. Where did they start, where are they going, and how did they get here? We understand not everyone is perfect and life is not always a Disney movie.

Personalized service

One of the key advantages of credit unions is our personalized approach to everything we do, and small business owners often mirror those practices. Much like small businesses, credit unions have the capacity to form long-lasting relationships bound by trust through expert guidance and tailored solutions.

This hands-on support can make a significant difference in the success of a small business and credit union relationship. We both mutually benefit from one another and in the end, we all know we are out for one another’s best interest and not the bottom line.

I recently brought in a small dollar loan for a growing salon. Their taxes and accounting were a mess, but they were making great leaps in correcting those shortfalls. All the same, the big banks would not even look at anything until they had it fixed. Instead of saying “no,” we asked, “how?” This small dollar loan is helping them expand their services and with their new business plan in place, they are expecting some significant growth in the coming years. We are excited to be a part of that.

Offer a helping hand

Small businesses are the lifeblood of the American economy, driving innovation, creating jobs, and fostering community development. This growing partnership with credit unions can make a major impact on our communities by providing access to capital, personalized service, and financial resources they can’t access.

As we become the champions of small business growth, credit unions can contribute to the prosperity and well-being of communities nationwide. By recognizing the importance of small businesses and nurturing their success, we can build a more resilient and inclusive economy for all.

Thanks for reading and if you want to hear some of these stories, check out our “The Extra Mile” business podcast hosted by Route 31 Credit Union wherever you listen.

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