When banks scaled back business lending at the onset of the recession, $900 million asset Black Hills Federal Credit Union, Rapid City, S.D., stepped up efforts to lend to local companies.
In the process, it increased its business loan portfolio from $12 million in 2008 to more than $43 million in 2011.
Ted Bangert, vice president of mortgage and business lending, says Black Hills Federal will lend to businesses of any size, but has targeted those with $1 million to $10 million in annual revenue.
These targeted businesses typically are either young enterprises that need credit to expand or established businesses with new owners.
Business Lending Keys to Success
To boost its business lending efforts, Black Hills Federal:
“These people want to take their business to the next level and they tend to be net borrowers,” Bangert says.
Black Hills Federal increased its business lending staff from two to nine. Lending staff called on businesses, attended Chamber of Commerce events, reached out to current business members, advertised in business publications, and participated in small-business lending seminars.
Technology upgrades included a business lending module supported by the credit union’s core system, a new business loan documentation platform, and new financial statement software.
Business lending procedures were refined to address underwriting, pricing, reporting, participations, risk ratings, watch lists, and problem-loan reporting.
An annual review by an outside loan consultant helps the credit union find weaknesses in its portfolio.
“It’s easy to book loans, but afterward there’s a lot of obligation for safety and soundness to your members,” Bangert notes.
Not only does absenteeism affect your bottom line, it increases everyone’s workload.