Turning Members Into Marketers: CU Gets Word Out On MBL Funds
AUSTIN, Tex.-A+ FCU here has selected a group of local entrepreneurs as part of its "myBusiness" challenge, providing $150,000 in interest-free loans to the winners as a way to get the word out that the CU has money to lend for business loans.
"The question was 'How do we let people in our market know that we actually have money to lend on business loans?'" said Roger Douville, AVP of credit/business lending. Douville said that rather than a traditional loan campaign, A+ FCU determined it would be more effective to find ways to engage the community while collaborating with local business partners.
Through an alliance with local business development group called BiG Austin (for Business, investment, Growth), and the Texas State Small Business Development Center, A+ put the word out that it would offer business loans of up to $25,000 at 0% APR. About 40 applicants threw their hats in the ring, a process that also required the entrepreneurs to go through training classes with BiG Austin and the Development Center. Approximately 13 of the would-be entrepreneurs completed the training, emerging with "bona fide business plans," said Douville, six of which the CU's lending committee ultimately approved.
"As lenders, we wanted to be prudent and say 'We're going to treat these applicants as we would for any other business loan,' so they had to go through all of the criteria we require for all of our borrowers-credit analysis, review of a business plan and an assessment of what their needs are and what we can provide for them," said Douville.
The credit union made $150,000 available, but Douville said that the numbers just conveniently worked out to six business plans receiving $25,000 each. "Quite honestly, if the business plans were not so strong and couldn't justify the need, they probably would have only gotten $10,000 or $15,000, if anything at all," he said. "It just worked out that way that these people had very well thought-out business plans and justified the dollars to us."
Douville stressed that "these are bona fide loans and they're going to be treated like loans. If they pay us back, fantastic; if not, we're going to have to treat them like everyone else that doesn't pay a loan."
All six borrowers went through A+'s standard loan-closing procedure, including reading and signing documentation detailing their responsibilities upon disbursement of funds. The credit union also took collateral-whatever the borrower was able to offer, said Douville-and loan recipients will have to come together quarterly as a group and with the CU's business partners to discuss best practices, how their business has progressed, and more.
Because the $849-million credit union isn't charging interest on these loans, Douville said that the real ROI will come through increased exposure. While he said it's too soon to say if the program has led to an uptick in business loans, he said that the CU has received some press from the initiative, and that these six ventures were their own advertisement for the CU's business loan offerings-a service many A+ members didn't even know was available, he said.
"We've got 92,000 members, and they're going to get the word out a lot better than any marketing campaign," he said. "We could've taken $150,000 and done advertising, but that kind of falls with a thud. This way we get a lot more of the community involved and it's a stronger message that we do have money to lend, we are a quality business lender and we're here to put money back into our community."