NEW YORK — Wal-Mart Inc.'s Sam's Club will begin offering loans of up to $25,000 to members in an effort to set itself apart from other warehouse chains and build goodwill to bring in more business.
The loan program, which Sam's Club calls the first of its type, is aimed at boosting business for a Wal-Mart unit that is trying to raise its profile among the small businesses that make up a good deal of its clientele.
"Access to capital is a major pain point for our members and the small business Main Street community," said Catherine Corley, vice president of membership at Sam's Club. "We believe this pilot program is a step in the right direction to help fuel small business growth."
The move comes as Wal-Mart aims to reinvigorate sales gains at its Sam's Club warehouse stores. The retailer closed 10 of the stores in January and let go of 10,000 demo staff as it switched to an outside vendor. Most of the staff was hired back by the vendor, spokeswoman Kristy Reed said. The operation is in the midst of remodeling stores, planning to complete 60 to 80 by the end of January.
The loan program will focus on minority-, women- and veteran-owned businesses, as well as very small enterprises. "It works well with us because that is who many of our members are," Reed said. The program is structured so that Sam's Club isn't directly involved with banking — something its parent has made a run at — but rather, an outside lender is handling the logistics, Reed said. Sam's Club makes $50 per funded loan.
Sam's Club is testing the online program with Superior Financial Group LLC, a Small Business Administration lender. Club members who qualify would receive loans between $5,000 and $25,000. In a November survey, Sam's Club said nearly 15% of its business members reported being denied a loan to run their operations, up from 12% in April 2009.
Sam's Club members who apply for a small business loan online during the pilot will receive $100 off the application fee and a 7.5% annualized interest rate, which Sam's Club said is a 25-basis-point discount. The loans carry 10-year terms and no penalty for early repayment.
Sam's Club said that while the majority of its small business loan pilot program will be delivered online, the company will test some in-club communication and other marketing efforts to reach business members and small business owners. Sam's Club is not currently looking at expanding the services, Reed said.
Representatives at other major warehouse clubs, Costco Wholesale Corp. and BJ's Wholesale Club Inc., were not immediately available for comment.
Wal-Mart shares are up 2.5% to $49.16.
