As credit unions continue to seek out more ways to generate income, the Pennsylvania Credit Union Association is hoping a new partnership will offer another solution.
The league and CRIF Lending Solutions have formed a partnership to bring merchant lending to the state’s credit unions.
The new offering aims to help generate revenue from local merchants by offering immediate financing on everything from ATVs to swimming pools to jewelry via a Web-based portal, according to the PCUA. The outsourced point of sale financing solution handles every aspect of merchant lending from merchant sourcing and sign up to contract funding and disbursement.
“As we talked with and listened to credit unions, we found that loan growth was the number one thing,” said Russell Evans, PCUA assistant vice president of business development. “We wanted to be able to offer another option other than indirect lending.”
CRIF Lending Solutions provides loan and account origination, business process outsourcing, credit decisions, data access and analytics to more than 650 banks, credit unions, finance companies, retailers and credit card processors.
Evans said merchant lending allows credit unions to select different types of businesses, including existing select employee groups, they want to work with. Members can go into retailers that can provide on the spot financing. By offering merchant lending, Evans said credit unions can compete with finance companies.
“A lot of finance companies jump in and out of the market and their financing can be 18% or more,” he said.
In terms of how the revenue is split between credit unions, CRIF and the PCUA, the marketing agreement with business partners will make that determination, said Michael Wishnow, PCUA senior vice president of communications and marketing. Credit unions that partner with the association will be eligible some advantages.
Historically, merchant lending has been dominated by large banks said Kyle Kehoe, vice president of sales at CRIF.
“Now we can bring the technology and services to credit unions to generate new loans to help them succeed and grow,” Kehoe said.
CRIF has close ties to the credit union industry, Kehoe noted. In October 2011, CRIF Select, a division of the company, expanded its outsourced lending solutions for credit unions and auto dealers into the Colorado indirect lending market. In 2010, CRIF Lending Solutions launched at CUNA’s Governmental Affairs Conference.
Evans said the league looked at other providers in the marketplace. It was sold on CRIF’s expertise and product lineup, he added.
While more credit unions are getting into business lending, Kehoe said merchant lending can be a viable ancillary product. “There are a lot of credit unions that are looking to grow their MBLs."