Small company loans survive credit crisis at Sams Club

Small business lending has to adapt to survive. Small business loans have non-existent almost during the credit crisis, a stubborn legacy of the financial meltdown, housing crisis and Great Recession. But small business credit is making a comeback, even as a miserly banking industry holds back the U.S. economy as it tries to fight its way out of the recession. The latest innovator is Sam’s Club, which announced a pilot program to offer small business loans to its members.
Source for this article: Small business loans adapt to survive credit crisis at Sams Club by Personal Money Store
Small business lending that is innovative
The credit crisis is holding back the growth, hiring and spending of companies that Sam’s Club wants as part of their customers. MarketWatch reports that Sam’s Club, a unit of Wal-Mart Stores Inc., is testing a program to offer qualified members small-business loans from $ 5,000 to $ 25,000 backed by the Small business Administration. Small business loans can be offered online to Sam’s Club membership through a partnership with Superior Financial Group. Members who apply for a small business loan from Sam’s Club and online get $ 100 off the application fee, a 20 percent discount and a 7.5 APR. The terms can be locked in for 10 years.
Small business consumer spending stimulus
Sam’s Club decided to start offering all of their small business loans online after a company survey of small company customers indicated that tight credit was cutting into Sam’s Club retail sales. It was reported by The New York reports that just less than half of Sam’s Club membership is small business customers, accounting for just more than half of its revenue. 200 individuals have applied for SBA loans with a 45 percent approval rate. The business says it does not expect small business loans online to be a huge moneymaker, though it earns $ 50 for each financed loan. The payoff is to get consumers spending more freely — Sam’s Club hopes.
Another innovator for small company loans
Small company credit could be loosening at banks too. Last week JPMorgan Chase announced a program to stimulate small business hiring and growth. The JPMorgan Chase small business loan program isn’t as accessible as the pilot for Sam’s Club members, but it represents one more oasis within the credit crisis desert. The offer includes lowering the interest rate by 0.5 percent on a new business line of credit for each new employee that has been hired, up to three employees, for the life of the loan. The offer is available for companies that qualify for lines of credit up to $ 250,000.
Some of the small company lending motives
The Sam’s Club small business loans online pilot seems like as an unusual move for parent business Wal-Mart. According to MarketWatch, Wal-Mart has been accused of harming small companies with its aggressive pricing, scale and business methods. And a report at bnet said Wal-Mart chose Superior Financial as a partner because ongoing efforts to add banking to its resume makes the financial industry nervous.
Small business loans and a success story
But Sam’s Club small business loan customers like Michael Golata don’t care about the politics that are behind the program. Golata, a contractor in Louisville, Ky., for United Parcel Service, explained to the New York Times that he applied online for a $ 10,000 small business loan at 7.5 APR and got the money in 24 hours. He bought a new truck, hired 3 drivers and went from billing UPS $ 3,000 a week to $ 8,000.
Discover more details here:
Marketwatch.com
marketwatch.com/story/sams-club-takes-on-credit-crunch-offering-loans-2010-07-06?reflink=MW_news_stmp
New York Times
nytimes.com/2010/07/05/business/05loan.html?_r=1&scp=1&sq=sam%27s%20club%20small%20business%20loans&st=cse
Bnet
blogs.bnet.com/business-news/?p=3188