While unemployment is rising to ever higher levels, manydisplaced by this trend are heeding the the call of theentrepreneurial spirit.

Americans today, as in times past, are stepping out and startingnew businesses to supplement household income. Truly, when timesget tough, the tough get going.

This is precisely why the National Institutes of Health FederalCredit Union recently launched a small business program to serveits constituency. As the largest credit union in the nation servingthe bio medical industry, the mission of the organization isevolving rapidly to align with the transformation of this segmentwe are chartered to serve.

Such an endeavor requires a significant commitment of time andresources to properly provide services to small businesses in amanner that is both safe and sound. That commitment comes with achallenge to prepare competitive offerings within the boundariesand controls that meet the regulatory standards of ourtimes.

Small business is defined as those with sales under $10 millionand less than 500 employees. Those may sound like big numbers, butthey actually do not translate into very large loans. The averagecredit union business loan is $250,000 and is well collateralizedwith all of their business assets, or as in most cases, with realestate, and of course, their personal guarantee. Within the currentscope of what credit unions can offer, there is a great opportunityto provide efficient and affordable services including many formsof loans to current small businesses as well as to support thosestarting up a new endeavor.

The SBA makes it easy for credit unions to become SBA lendersand is eager to assist them with their loan programs. The 7(a)program is great for those members who are starting a business or aprofessional practice as well as for any loan the credit unionmight feel carries too much risk. The only caveat is they have toown their own home as SBA likes to take a second look on the hometo bolster the required personal guarantee.

The 504 program is also a great way to provide financing to amember who is buying a building to house their new business.Generally, the SBA will take 40% of the loan amount, the borrowerwill put down as little as 10% and the balance is your loan. So,your exposure is never more than 50%. Loans to existing businessesare easier because they have the required financial history onwhich to base your lending decision. There is no more rewardingexperience for a lender than to start with a company and continueto serve their needs as they grow and develop their products orservices.

At NIHFCU, we have been privileged to lend to medical andbiomedical professionals. Our first loan was to a member that is acareer medical social worker who recognized the growing need formedical transport within the Washington metro area. With the helpof the SBA, we provided her the funds to realize her goals. Sincethat first loan, our member has been back to expand her fleet ofmedical transport vans.

Our second loan to a dentist said “The timing was perfect.I hadrecently refinanced my home with another lender and wanted to takeadvantage of low interest rates to refinance my commercialproperty. I was impressed by the easy and fast process at NIHFederal Credit Union, as well as the personal relationship Iestablished with the business lending representatives.”

With our personal attention and products that fit for the smallbusiness owner, we are personal bankers. Successful businessservice initiatives are within reach for those that are willing tocount the costs required to build a durable business model. Thisrequires sound strategy, detailed preparation, highly qualified andexperienced personnel and a commitment to operational integrity andcontrols that far exceed standard operations. 

Juli Anne Callis is President/CEO of National Institutes ofHealth Federal Credit Union.
Contact 408-679-3936 [email protected]