AUSTIN, Texas-A unique lending promo at A+ FCU is not only helping six small startup businesses succeed, it's making the credit union a better business lender.
Roger Douville, AVP credit and business lending, said the effort-called myBusiness Challenge-includes an educational component and sessions in which six startups gather with members of A+ to discuss their wins, challenges, and to provide advice to each other. It's those insights into the inner workings of small startups that have made the credit union adjust how it makes loans to businesses (Credit Union Journal, May 13, 2011).
"This program has given us a rare look into the workings of startups," said Douville, who added each venture is doing well. "We have learned more about their mindset, their capabilities, and their characteristics-things we normally may have taken for granted. Now when a small business comes in to talk about a loan, it is even more of a collaborative conversation and we are more actively engaged with them after we make the loan to ensure their success."
That new knowledge makes it clear to A+ that startups may be experts in their trade, but weaker in overall business management than the CU originally thought.
Douville added the $952-million credit union now knows it needs to provide more business resources. "Maybe not the education, but strong recommendations as to where they can get it. So the definition of being your lending resource now means a whole lot more than it used to."
Rethinking Loan Applications
It means the approach to taking the application for the loan has changed, as well. A+ no longer simply looks closely at the people asking for the loan, the business plan, and the numbers, it asks deeper questions about whether the business has, or knows all about the resources it will need to succeed.
Just over a year ago myBusiness Challenge awarded six $25,000, 0% small business loans from A+ to six entrepreneurs. Before they received their loans, the winners, who were chosen based on their business plans, had to complete financial education at the CU. Then they sat down in quarterly meetings as a group with A+ business services reps, in addition to counselors and mentors from small business support services BiGAUSTIN and SCORE, and the Texas State Small Business Development Center.
"They each found significant value in the courses, mentors and supportive meetings," said Douville, adding that the support group meetings enabled the startups to "go to the next level. People that open up a business are very intelligent, but it became clear to us that they may be focused on one aspect of their business which they know a lot about. For example, a yoga studio will know a lot about yoga, but they may not know a lot of the legal and accounting aspects of the business and will need assistance there. It's not good enough for them to just know their craft."
During the follow-up sessions when a business acknowledged it was weak in a specific business area, a lot of advice was shared by the fellow business owners, explained Douville. "They have been great at helping each other and these businesses stay in touch outside of the meetings."
Douville said myBusiness Challenge was created to emphasize to the local community that the credit union has money to lend to small business, and also is helping to create jobs.
And an added bonus: Douville said 14 new positions resulted from the six startups.
For info: Six Entrepreneurs Win No Interest MBLs From A+ FCU