In an effort to broaden its community outreach and gain more small business leads, Members 1st FCU has partnered with the local Cumberland County to offer small businesses loans.
Business First is a loan program that provides private lending for small businesses in Cumberland County, with loan amounts for business expansion from $25,000 to $250,000.
Mark Ritter, AVP-small business lending with Members 1st, also serves on the board of directors for the Cumberland County Economic Development Agency (CCED). Ritter said the Members 1st board felt a county-level partnership would fit its mission and expand lending. "We really jumped at the opportunity," Ritter said.
Business First is modeled after a state-level program that brought Pennsylvania businesses together with private financial institutions for loans from $1 to $10 million. Another program offered loans from $250,000 to $2.5 million, but there was no option for local, small businesses.
The CCED ensures that business applicants fit the plan's criteria and in turn, participating financial institutions provide a fixed 5% rate loan, that would provide up to 40% financing with a cap of $250,000.
Cumberland County has a large transportation sector and a business seeking funds to expand operations fits into the Business First model. For example, a local delivery business seeking to expand with a $100,000 project, could use the $40,000 in cash for two small delivery trucks, expanding its loading dock areas or hiring part-or full-time employees.
Businesses in the following industries are eligible: agricultural production or processing; manufacturing/industrial; transportation/logistics; business and technology solutions, applied healthcare; travel and tourism. Successful applicants must operate in Cumberland County, have fewer than 100 employees, and commit to hiring more in the future.
Many Unaware of Credit Union
Ritter said many small business owners aren't aware that credit unions do offer business loans, an area where Members 1st has extensive experience. "Once they find out about us, they learn we're a nice option," Ritter said.
The Business First program was started after state-run programs ran out of budget money, halting or delaying some loans. Wendt said Cumberland County commissioners asked for a way to ensure local businesses wouldn't be left out in the cold due to state budget shortfalls. Small businesses comprise more than 70% of Cumberland County businesses, he said.
Wendt and the CCED selected business in main sector areas such as manufacturing versus secondary businesses that would serve them. While travel isn't normally considered a main sector business, Wendt said travel and tourism is the second ranked industry in Pennsylvania and was therefore too important to leave out.
The CCED sent letters to every financial institution in the county with Members 1st and F & M Trust, a local bank with a 100-year history, signing on first. CCED Executive Director Mark Wendt said this type of business loan program fits well with any credit union's mission, helping small businesses expand operations, add employees and help stabilize the local economy. Wendt said among area credit unions, Members 1st made a perfect fit for Business First loans.
"None of them have pursued business development like Members 1st has," he said.
Wendt said any financial institution working with this type of loan program would control their own lending process even though they've agreed to a locked-in, lower rate. Businesses that don't qualify for the Business First program aren't sent on to participating credit unions or banks. "The best bang for the buck is to do what they're used to," he said.
Ritter said Members 1st has several loans in the application process that the $1-bilion CU has gotten a "steady stream" of leads from the CCED. Members 1st serves 107,000 members.
CUJ Resources
For info on the Cumberland County Economic Development Business First loan program, contact Doug Wendt at 717-240-5353 or visit www.cumberlandbusiness.com.
