From Startup to Prosperity: How Credit Unions Fuel Business Dreams

Small businesses are the lifeblood of the American economy, and banking is the heart that keeps it pumping — and within the banking industry, there is no segment that has more heart for their borrowers than Credit Unions. I recently had the chance to attend the Credit Union Business Group Conference where the focus is solely on Member Business Lending and how Credit Unions can develop and enhance that line of lending. Among all the Credit Unions there, I saw some that were just breaking into this market, some that were along the journey, and others that were dominating – just like the businesses they serve. Let me share with you how I saw Credit Unions meeting the needs of their member businesses.

The Startup Business and the Startup Lending Product: Focus on What You Know

Startup businesses are often the results of the passion and knowledge of the founder. The founder of the startup knows the industry and what they can do to make a difference to attract customers. They don’t try to come up with trick businesses – they start with the fundamentals of what they know, and they build on that.

The same is true for credit unions that are successfully supporting startups. I had the chance to talk to executives from the Tennessee Valley Credit Union, and they shared how they are taking advantage of the knowledge they have in consumer indirect lending and pushing that into business indirect lending. The result is that a general contractor or plumber who decides to start a business and needs a pickup truck has a first stop for future financing needs in the folks at Tennessee Valley CU. The Credit Union is expanding its market with minimal risk because they have awareness and competitive advantage in the product and market they are serving with the indirect product.

The Growing Business Ready for the Next Stage: Know the Friends Who Can Help

When a business is ready to go to the next stage, they often need some help. The same is true for credit unions as well – and that help comes from the Small Business Administration (SBA). If you don’t know what you’re doing, it can be daunting to learn the processes and keep up on the SOPs that are issued by the SBA. However, what I saw at this conference was next-level collaboration. This sharing of processes, insights, and is unique to Credit Unions and can help take things to the next stage for them as a group.

This kind of sharing leads to solid growth – and with the help of SBA guarantees – increases the strength of local communities.

The Mature Business: Provide Sustainable Growth to the Local Community

One of the topics that came up in multiple sessions was the risks that Credit Unions are seeing with Commercial Real Estate (CRE) and the repricing that many long-term relationships are facing. This is a complex issue for many businesses and financial institutions because they didn’t anticipate the Federal Reserve’s rapid increase in rates to combat inflation.

I am not suggesting that Credit Unions change their risk appetite, but I believe that in some markets, Credit Unions will be in a unique position to help structure deals that many others would not be able to come up with to solve these unique problems. Credit Unions have a unique view of the community, and their boards have unique insights that can lead to some unique deals and especially unique opportunities.

In conclusion, the journey from startup to prosperity is a path shared by both small businesses and credit unions. Just as entrepreneurs build their ventures based on passion and knowledge, credit unions leverage their expertise to support their member businesses at every stage of growth.

Author Bio

With more than 25 years of experience in the financial services industry, Mike Horrocks possesses a unique and extensive blend of financial expertise, technology skills, process redesign abilities and solution management experience. Horrocks’ background enables him to create go-to-market strategies for new solutions, help clients convert strategies into revenue generating initiatives and forecast market direction.

As the Vice-President of Product Management at Baker Hill, Horrocks’ responsibilities include the identification and development of new market opportunities in the business of lending, risk management, and analytics for financial institutions. Mike holds a MBA both in International Finance and Venture Technology Management from Indiana University and a B.S in International Finance from Brigham Young University.

Before joining Baker Hill, he held executive positions within several other organizations, including Experian, Profit Technologies, SAIC, Broadway and Seymour (FIS), Zions First National Bank and Zions Data Corporation.

Horrocks is a member of many associations including the Risk Management Association and Bankers Without Borders. In his free time, he enjoys traveling internationally with his wife and five children.