One of the consistent challenges of credit unions across the country is how to attract new members and enhance their deposit base. Given that boomers and Gen Xers, the two generations who own about 85% of U.S. small businesses, are likely already members, small business lending offers a substantial growth opportunity for credit unions.
Understanding the Small Business Landscape for Credit Unions
The United States boasts over 33 million small businesses, making up nearly 99.9% of all local businesses, according to research by the U.S. Chamber of Commerce. These businesses range from side hustles and small mom-and-pop shops to established entities across multiple industries.
This diversity presents a unique opportunity for credit unions to serve a segment that is already a large part of their membership base.
The Credit Union Advantage in Small Business Lending
Small businesses employ nearly 61 million Americans, highlighting their role as the backbone of local communities where credit unions traditionally operate.
By enhancing small business lending, credit unions not only support the local economy but also solidify their member relationships, leading to increased retention and deposit stability.
Challenges and Opportunities for Credit Unions
Often, small business owners manage their business finances through institutions different from where they have their personal accounts, primarily due to a lack of necessary banking features like business checking with remote deposit capture and accessible business loans. This scenario opens an avenue for credit unions to offer consolidated services that cater to both personal and business banking needs.
To capitalize on this opportunity, credit unions can implement targeted technological solutions that cater specifically to the needs of small business owners:
Merchant Lending Portal
The Merchant Lending Portal by IMS Integration offers a comprehensive solution, particularly for growing a credit union’s indirect lending portfolio. It streamlines the loan application process for merchants, providing a secure, user-friendly online portal accessible 24/7.
With real-time integration with KeyStone Core, it ensures quick and accurate loan decisions, enhancing the merchant experience and aiding credit unions in efficiently managing multiple merchant accounts. This tool is crucial for credit unions looking to expand their offerings and increase engagement with small business members.
Web Loan Application
IMSI’s Web Loan Application facilitates an easy application process for small business loans, allowing business owners to swiftly secure funding necessary for growth and operations. This platform simplifies the application process, removing traditional barriers to finance.
Loan Payment Portal
The Loan Payment Portal offers a straightforward interface for managing loan repayments, which is crucial for maintaining good credit and financial health. This tool allows small business owners to easily keep up with their loan obligations, fostering better financial management and stability.
By incorporating these specialized lending solutions, credit unions can significantly improve their service offerings to small business members, making financial management more accessible and less burdensome. This not only helps in retaining existing members but also attracts new members looking for efficient, tech-savvy banking solutions.
Strategic Considerations
When planning to expand into small business lending, credit unions must consider several factors:
- KYC/KYB and Cash Flow Analysis: Ensuring thorough due diligence and understanding the financial health of businesses.
- Quick Decision-Making: Implementing technologies that allow for rapid loan processing to meet the urgent needs of small businesses.
- Partnerships with Service Providers: Collaborating with fintechs to enhance technological capabilities and streamline the lending process.
Enhancing Credit Union Growth Through Small Business Lending
It’s the perfect time to revolutionize your credit union’s small business lending strategy. Reach out to IMS Integration today to learn more about our innovative solutions like the Merchant Lending Portal, Web Loan Application, and Loan Payment Portal. Let us help you enhance your service offerings and make a lasting impact on your local business community.
