Business lending boosts income while allowing members to succeed.
Like many credit unions, Faith Community United Credit Union in Cleveland met a great market demand processing Small Business Administration (SBA) Paycheck Protection Program (PPP) loans during the first months of the coronavirus (COVID-19) pandemic.
While the heavy demand posed many challenges for the $14 million asset credit union, CEO Jacqueline Moore says Faith Community United’s small size worked to its advantage. “A lot of businesses went to the big banks and could not get through the portal. Everything we sent was processed and approved.
“Sometimes you see a big cruise ship that moves with grace and elegance, but what you really need to get to the other side of the island is a little speed boat,” she continues. “We were that speed boat.”
Faith Community United serves a primarily low-income, African American membership, and a “redeveloping” business community, Moore says. Many of its business loans are through the SBA 7(a) program, the agency’s primary program for assisting small businesses.
She says Faith Community United became an SBA lender because small businesses were having difficulty obtaining financing. The credit union hired an independent SBA consultant to assist with its efforts.
Faith Community United also directs members to agencies such as the Urban League, Cleveland Neighborhood Progress, and Consumer Credit Counseling. These groups help members create business plans, repair their credit, and find grants and other funding.
“It takes a village,” she says. “If people spend their earned dollars within the community, it circles back. The credit union will grow with new accounts and new deposits. The community receives needed jobs and services. Everyone prospers.”
Tallahassee, Fla., is a college town, serving as home to Florida A&M and Florida State universities. Entrepreneurship comes with that territory, says Sheilah Montgomery, president/CEO of $22 million asset Florida A&M University Federal Credit Union in Tallahassee.
“African American entrepreneurs also tend to have service-oriented businesses,” she says. “We help them with food trucks, food and catering, barber shops and beauty salons, repair shops, and child care centers just to name a few. This is the gig economy.”
Many young African American entrepreneurs fear rejection because of past experiences with other financial institutions, Montgomery says. “They were financing their businesses out of their own pockets. So when we say access to capital, the first thought in a Black entrepreneur’s head is ‘I have nowhere to go.’”
The credit union made assisting African American entrepreneurs a priority and develops personal relationships with business owners, she says. “That helps us eliminate any gaps in understanding how the member runs their business.”
Most of the businesses have fewer than three employees “because they haven’t been able to leverage the growth they need to expand their businesses,” Montgomery says. “We’re here to help them do that.”
Michael “Doc” Dougherty, chief lending officer at $1.8 billion asset Together Credit Union in St. Louis, says the credit union’s lending team focuses on business owners’ individual needs.
“Many of our business members, especially our minority-owned and woman-owned business members, had trouble receiving loans from larger financial institutions,” Dougherty says. “They chose Together Credit Union because we review every business owner’s financial situation on a case-by-case basis to determine the right loan, the right rates, and the right terms. We don’t offer a one-size-fits-all lending process.”
The credit union has a large business loan portfolio consisting of several minority-owned businesses and area churches.
“When you help a church, it is like helping a small community of people,” says Lisa Morgan, Together's assistant vice president/commercial loan officer. “They are looking for a financial partner who wants them to succeed.”
One of Faith Community United’s largest business loans was to a church.
“We started with the church, and because we have that community relationship, we were willing to take that risk,” says Moore. “They paid off the loan in half the time we expected. This all goes back to the credit union philosophy of ‘people helping people.’”
This article appeared in the Fall 2020 issue of Credit Union Magazine. Subscribe here.