In today's competitive banking landscape, credit unions are navigating new paths to attract members and secure steady funding. Small business lending emerges as a promising opportunity for growth, offering credit unions a strategic advantage in serving their communities.
Small Business, Big Impact
With over 33 million small businesses in the United States, these businesses form the backbone of local economies. Interestingly, a significant portion of small business owners are also credit union members. This overlap presents a natural synergy, as credit unions can cater to the financial needs of their entrepreneurial members while fostering community development.
Credit unions have long prided themselves on their community-focused approach. By prioritizing small business lending, they not only support local economies but also strengthen member relationships. Unlike individual deposits, small business accounts offer stability and revenue potential, making them an attractive focus for credit unions seeking financial growth. With higher average balances and increased fee revenue, these accounts allow more frequent transactions and show greater stability over time.
Navigating Challenges
Entering the small business lending arena isn't without hurdles. Credit unions must assess loan applications diligently, considering factors like compliance, cash flow analysis and risk management. Speed is also essential, as small businesses often require quick access to capital to acquire opportunities.
To overcome these challenges, credit unions can leverage technology and strategic partnerships. By integrating fintech solutions or partnering with Lending-as-a-Service providers, credit unions can streamline operations and enhance decision-making, ensuring they remain competitive in the evolving financial landscape.
Meeting Member Needs
Many credit union members who are small business owners may currently maintain their business accounts elsewhere due to perceived limitations in services offered by credit unions. By expanding their offerings to include small business lending, credit unions can attract these members back into their fold, providing a one-stop financial solution for both personal and business needs.
Community Impact
Small business lending represents a transformative opportunity for credit unions to drive growth, deepen member relationships and make a meaningful impact on their communities. By embracing innovation, navigating challenges and staying true to their values, credit unions can position themselves as vital partners in the success and prosperity of small businesses and their communities.
Rapid Finance offers a loan origination system that helps credit unions build their small business lending programs. Rapid knows small business lending, and since 2005 has been committed to helping small businesses grow big with capital and technical solutions.