Many credit unions are looking for a “quick fix” to offer MemberBusiness Loans. That translates to simply hiring an ex-bankerlooking for a new lease on life and telling them to run with it.That's the thinking we're seeing. In many credit unions, and (it'sscary!) it's not just smaller credit unions who are taking shortcuts. Recently I was talking with the SVP of lending at a creditunion with more than $1 billion in assets about the planning he didprior to their starting a member business lending department. Iasked him if he would send me his business plan. . It was one pagelong. The entire plan can be summarized as follows: 1) Hire anexperience business lender, 2) Generate $50 million in memberbusiness loans in the first year. In an effort to alleviate thissituation, in early 2003, CUNA's Center for Research and Adviceinvited a small group of experienced credit union business lendersto meet in Madison to share ideas and discuss the challenges facedby business lenders in the credit union movement. The biggest riska credit union can take when starting a business services programis to try and be all things to all members-but if you aredetermined to try, then at least have the experts on staff! Mostcredit unions simply can't handle providing all of the servicessmall business need immediately. And to try is most times to invitefailure. And while true of any service you provide, it isespecially true of business services. You must do it better thanyour competition-measurably, demonstratively better. Credit unionsneed to prove that they really offer a “difference,” and that beinga member means being unique. Business owners must be shown whatmakes credit unions different than other financial institutions.There has been a significant amount of discussion within the creditunion movement about the benefits of originating member businessloans and providing related business services. Naturally thesediscussions eventually turn to basic bottom line considerations:what are the service and profitability benefits of offering memberbusiness services; and conversely, what are the pitfalls and costs?If you determine that the market opportunity exists to offer memberbusiness services, the next step is to educate the decision makersat your credit union as to the economics and other strategicconsiderations involved in this line of business. The “buy-in” ofthe Board of Directors, senior management, and credit union staffis vital to achieving success with a member business servicesprogram. In any case, you will not want to offer any product orservice that you do not fully investigate from both the benefit andcost sides of the ledger, understanding the implications of bothand how they fit into your credit union's overall strategic plan.In general, due to the risks involved, a member business lending(MBL) operation requires a higher degree of focus and attentionthan most other arenas in which a credit union may choose tooperate. As in any complex operation, there is risk in providinginadequate management focus and/or inadequate levels of competence.An MBL operation requires competence and quality staff at alllevels. There is danger, even with competent leadership, ofdelegating too much too soon to unproven staff or relying onunproven processes or even unproven underwriting parameters. Mostcredit unions looking to establish a member business servicesdepartment, particularly one with a lending component, will need toturn to the banking industry to find the expertise required to makesmall business and small business loans. Experience here counts.Most credit unions find that they require someone with at leastfive years business lending/service experience-the more the better.An important caveat: sales experience is highly beneficial, but itis not enough. A member business services leader must also havehands on experience with multiple facets of the operation,particularly if you are asking them to build a department. Theseprofessionals often come at a significant cost in terms of salary,benefits and bonuses-and even then can be difficult to find. In thecurrent environment, a community banker may be the right choice fora credit union start-up. Why? Because these professionals oftenhave more experience as a full service banker. Also, they may havemore of an affinity for the culture and mission of a credit unionthan someone from a larger banking interest. According to the 2003CUNA E-Scan Complete CU Staff Salary Survey report, the averagemember business loan officer's salary is $40,527 ($46,189 at CU'sover $400 million in assets); with average incentive pay of $2,373and an average bonus of $1,304. However, in many markets you canexpect to pay over $100,000 in salary for an experienced businesslender. When you finally identify a candidate that seems to fityour needs for running your business services operation and youbring them aboard, your first job is to identify a successor andbegin training them! Why? Because banks are turning out fewer andfewer bankers with well-rounded experience, and when theopportunity is available to train someone from your own staff to bea business services leader-carpe diem! Pressures on any new productor service a credit union offers, including business services, thatoriginate within the credit union itself are internal forces. Theseforces are the primary challenges within a credit union that standin the way of succeeding with a new product or service. In mostinstances though, these internal forces can be given a singlelabel: resistance to change. If your credit union decides to becomeinvolved in business services, particularly lending, you may findthat you create an unintentional rivalry between your consumer andsmall business lenders who often see their functions, standards andcompensation as incongruous. The key to controlling or bluntingthese forces is the knowledge that they are within your ability tocontrol! And how do you exert that control? By a thorough job ofdue diligence and explanation of the goals and expectations ofentering a new business, such as member business services. A fair,open investigation of the needs and potential success of a memberbusiness services operation should be open to all affectedemployees. That is the surest way to allay fears and overcome ahuge portion of everyone's resistance to change.