Corporates looking to play role in helping CUs serve small business; Northwest Corporate's CUSO on verge of opening

OVERLAND PARK, Kansas – A new working group consisting of U.S. Central and six corporates which is looking into how corporates can help CUs serve small business is still in the very early stages. How credit unions can better serve the small business market has become a hot-button issue in the industry and corporate credit unions are working on their response to the demand. The small business working group includes U.S. Central, WesCorp, Northwest Corporate, Southwest Corporate, Empire Corporate, First Carolina Corporate and Mid-States Corporate. “Recognizing that there are a lot of industry initiatives working on this front, we’re looking at corporates’ core competencies and what we bring to the table to complement all the other initiatives industry-wide,” said Scott Burditt, VP of Research and Development for U.S. Central. Burditt said U.S. Central is working on some research for the group that it will probably present to them later this month. He also stressed that anything that comes out of the group will be available to all corporates, not just the six in the working group. “Credit unions are experiencing this need from members who can’t go to a SunTrust for a $75,000 loan for their lawn care business for example,” said Gigi Hyland, executive director for the Association of Corporate CUs. Hyland said large banks like SunTrust often won’t do commercial loans under $1 million or sometimes even a higher figure. Enterprising members who need smaller loans could be well-served by CUs, she said. Hyland said corporates are hearing from their member CUs who want to do more to meet small business demand, but don’t have the resources. “We’re not just looking into this because it’s being written about in the trade press, there’s a lot of demand,” said Hyland. Northwest Corporate is out ahead of all corporates in this area. It has already formed its own business services CUSO, CU Business Group, that will likely officially open its doors in September. It recently staffed up with two former community bankers who each have 20 years experience in dealing with business loans. Northwest Corporate President/CEO Kathy Garner said getting the systems in place takes some time. “We need to get the credit analysis, tax analysis, cash-flow analysis and other systems up and running. We hope to do our first loan and underwriting by next month,” said Garner. Garner said the term “strong demand” doesn’t even do justice to the demand from CUs. “We have credit unions calling all the time asking us if we can take loans right now. We’re just trying to hold off the demand until we’re ready,” said Garner. The CUSO is looking to not only do all the back-office work, such as underwriting, credit analysis, ongoing monitoring of collateral and credit, but also front-end work. It may mean placing a rep in a credit union to meet with members. “It will be a package of services for both front and back-end,” said Garner. As for the working group, Garner said there’s plenty for corporates to work on. For instance, the average CU DP system is not set up to handle business accounts and loans. “Maybe we can do something like coordinate with the top five data processors to work on that,” said Garner. Right now CU Business Group is just going to serve CUs in Northwest’s primary FOM (Washington and Oregon), but Garner said she has been contacted by other corporates about offering the service in other states. “Maybe other corporates can offer our products. We’re still looking at all that,” she said. Before the CUSO was formed, Northwest had already partnered with First Merchant Bankcard Services to offer its CUs a merchant bankcard program, which will allow members to grow their businesses by accepting credit cards.That product will be brought under the CUSO as part of one of its product lines, said Garner. [email protected]