KENSINGTON, Md.—A partnership between Lafayette FCU and Hitachi Government Finance is providing the CU some new business lending benefits.
The arrangement, the credit union says, allows it to deepen relationships with existing commercial clients and build new ones, and also helps to keep the CU from bumping up against its MBL cap.
Hitachi Government Finance, a division of Hitachi Capital America Corp., offers government receivables financing to companies that range from small, economically disadvantaged businesses, to mature, publicly traded companies that provide goods and services to U.S. government agencies and local governments. Typical clients have monthly financing needs from $50,000 to $20 million, Lafayette explained.
Ronda Polhamus, Lafayette COO, said Hitachi's experience in working with government contracts, including assignments and funding appropriations, helps companies maneuver through challenges government contractors face.
"Some businesses that have government contracts may need their money a little sooner than how the government pays," explained Polhamus, who said the CU will refer members to Hitachi when it spots clients with this need. "My understanding is you don't always get the money up front or as fast as you need it from the government. And if you are small, or a new business, you may need the money quickly to buy equipment or lease space."
Polhamus said Hitachi allows businesses to borrow against their government contract.
What the arrangement does for the $380 million Lafayette, said Polhamus, is add to the credit union's menu of business lending solutions, deepens relationships to increase use of the CU's businesses services and loans, adds new members, and keeps current clients from straying.
"This is a very good marriage," said Polhamus.
Lafayette also sees Hitachi referrals as meeting a member's business lending need without pushing the CU closer to its MBL cap, which it gets close to at times.
"This is another way we can help our small business members get some financing and it does not sit on our books," she said. "It's a value add that builds loyalty and will keep some folks from going down the street to the bank."
