ST. LOUIS - Certain that there was a market for it after nearlytwo years of in-depth canvassing of the small business landscape,the Missouri Credit Union Association and Missouri Corporate CreditUnion are poised to launch a business services CUSO. HeartlandBusiness Services, LLC, which will initially offer a variety ofbusiness loans, is expected to be up and running by the thirdquarter, said Jim Ahearn, the CUSO's interim manager and MCUA'ssenior vice president, credit union support services. Along withMCUA and Missouri Corporate, eight credit unions have signed on asco-owners: $682 million Anheuser-Busch Employees CU; $80 millionElectro Savings CU; $302 million Mazuma CU; $143 million MidwestUnited CU; $106 million Mizzou CU; $158 million St. Louis PostalCU; $443 million Vantage CU; and $81 million West Community CU. Aplethora of business loans will be offered including SBA loans,lines of credit, commercial real estate, inventory, equipment andmore. Heartland will be open to credit unions of all asset sizeswith loans ranging from $50,000 to $1 million. The CUSO will alsoserve credit unions outside of Missouri as MCUA has relationshipswith those in Illinois and the eastern part of Kansas. "We knewthere was a market but we just had to quantify it," Ahearn said.With the assistance of the Armstrong Group, a Virginia-basedconsulting firm, the seven-member CU task force formed in 2003 tokick off the effort, discovered where the small business ownerswere in the state, got feedback from other credit unions on theirinterest in using a business services CUSO and even surveyednon-credit union competitors on their pricing and how theiroperations were run. "Going into the study, we were under theimpression that banks had deserted the small business marketplace,"Ahearn said. "But what we found was banks were very interested inthe market and they were offering special accounts for theircustomers. If there was a weakness, it was in their ability toserve the customer once they had them." Add the continued trend ofbank consolidation to the mix and the idea of a business servicesCUSO looked even more promising, said Gary Hinrichs, chairman ofHeartland and president/CEO of West Community CU. "As banks becomemore regionalized and nationalized, the definition of smallbusiness changes," Hinrichs said. "For some it's at least $10million in sales or $5 million in sales. Small business owners werefinding that they weren't getting the personal service they wantedbecause some of these banks were shipping their business decisionsout of state." Another incentive for Heartland's launch was havinganother resource for credit unions to seek out non-traditionalforms of revenue, Hinrichs said. At West Community CU, like manyothers, members were "sent down the road" with their requests forbusiness loans simply because the product was not being offered.Credit unions can now collaborate to offer the loans without losingthose members. "We have the expertise to do it well and creditunions are getting (savvier) in their ability to offer moreproducts," Hinrichs said. Over the next few months, a new managerwill be hired along with two other employees, who will serve asloan officers and as an administrator, said Ahearn, who willtransition to a liaison role between the CUSO and the league once apermanent manager comes aboard. Heartland will lease space atMCUA's headquarters in St. Louis. Heartland currently has twolevels of participation: The Class A category allows credit unionsto become owners, have voting rights, and receive a patronagedividend declared by the board. Members here are also eligible toserve on the board and there may be some pricing differentialbetween owners and users. Ahearn said credit unions do not have tobe owners to use Heartland's services. The Class B category, ofwhich MCUA and Missouri Corporate belong to, have shares in theCUSO but do not have voting rights and are not on the board ofmanagers. At MCUA's recent annual meeting, Ahearn received a numberof inquiries from credit unions interested in the CUSO's services.He is in the process of setting up meetings with those prospects.MCUA got its feet wet in business services in 2003 when it, withthe assistance from the Ohio Credit Union League, developed abusiness deposit guide that included information on pricing andstructures. From there, the Association began to look at thelending side and began its research project with the ArmstrongGroup. The Ohio CU League, along with seven credit unions, launchedits Cooperative Business Services LLC in 2003. Heartland's entryallows small business owners to be free of the back-officepaperwork that may hamper their day-to-day operations, Hinrichssaid. "In many cases, the small business guy needs a lot of handholding, they want to be able to sit down and talk to someone,"Hinrichs said. "But they want less clerical hassles so they can gobuild their widgets. They don't want to be bogged down with bankdeposits, payroll and other things. One of our challenges is howcan we overcome this for them." Hinrichs said most small businessowners also want to be able to spend more time with their family."If we can meet their needs, they can have more of that time,"Hinrichs said. As for community bankers who have cried foul overcredit unions' headway in business lending, a few of which haveraised concerns on whether the right type of people are beinghired, Hinrichs said some of the movement's gains are a result ofthe banking industry's consolidation. "Quite frankly, the peoplethat we're hiring are being thrown out because of consolidation andmergers," Hinrichs said. "These are the people who are saying`here's a new opportunity for me and I can bring my 20 years ofexperience to (the credit union industry).'"[email protected]