Raddon wanted to find out how small businesses are coping with the recession. In a March survey, 30% of participants with annual sales of $500,000 to $10 million said they plan to lay off employees. Fifty-two percent will freeze pay and 41% plan to eliminate bonuses in 2009. Small business cost-cutting measures extend to health insurance benefits and 401(k) matches as well. Additionally, 9% of small businesses expect to reduce operating expenses by closing or consolidating facilities.

Although many small businesses are cutting costs to cope with the current economic environment, 18% feel that their annual sales will increase in 2009, while 37% expect flat sales comparing 2008 to 2009. Still, 45% expect a decrease in sales in 2009.

For credit unions, it may mean offering business debit and credit cards, lines of credit and other nonloan products to help fill a void left by banks and others that have shuttered relationships with their former small business clients, Biasella said.

“Quite candidly, we're seeing more of a need to develop relationships with small business members. They need working capital and a good deposit account. Even if it's something like developing a business credit card, there is more of a need to service all of the financial needs, not just provide loans.”

Because of their unique needs, credit unions can not assume they know what products and services matter the most to business owners, Biasella said. Target marketing may help to home in on which ones are the right fit. Determining what is the financial potential from business debit and credit cards and merchant card services might also go a long way to cement relationships.

When it comes to satisfaction and loyalty, credit unions should know that some small businesses may not be loyal to just one financial service provider, according to Raddon. Listing the share of wallet advantages of being a firm's primary provider as well as comparing consumer and small business loyalty may provide some answers on why entrepreneurs switch financial institutions. By finding out how often business owners use their personal accounts for business purposes, credit unions can use that to determine what where they should invest in channel upgrades.

According to loan delinquency trends, 30-day loans are now at 6.4%, which is up from 5.8% over last year, Biasella pointed out. The delinquency rate has continued to trend upward over that last five years. While the figures are not nearly as bad as those in the early 1990s, “Historically, they're getting up there.” He made the point about delinquent loans to reiterate that offering just business or commercial real estate loans may not be the only way to go for credit unions.

“Many credit unions say the quickest way to reach small businesses is through commercial real estate loan participations,” Biasella said. “And, that's fine but you have to be able to manage [those types of loans].”

–[email protected]