NerdWallet ("NW"): What is the role that credit unions play in the small business lending space, especially in comparison with other lenders (in particular, community banks, who also lend to their local communities)?
Brandon Michaels, President & CEO of Mazuma Credit Union ("BM"): I think Credit Unions are inherently local, and therefore play a vital role in local small business lending. While credit unions are not solely commercial lenders, as is the case with many community banks, we are very relationship-based and many times have a deeper personal connection with our business members. The process in which our Members go through is generally more personable and not as rigid as our banking counterparts. Some community banks are so large that decisions could be made by executives in another city. That isn't the credit union way. So, because credit unions are local and do things because we care about our communities, not just to make profits, we have a vital role in the very small to small business lending space. Banks' average size loan is larger than that of credit unions'.
NW: How do you see small business lending evolving in the next year?
BM: I think the banks are ramping up to become much more competitive in this space. For the last few years, banks have been hunkering down and really ignoring the smaller credits. Based on what I'm hearing from our own business Members, you have to have a large deal or flawless analytics in order to get a loan with a bank. I see that changing a little bit in the next year. It will be a much more competitive market.
NW: Please describe your credit union and its unique difference.
BM: Mazuma's purpose is to make Kansas City a Better Place to Live. The vitality of our businesses is one way we can help. Our process is very relationship-based and specific to the individual Member's business and situation. We are not as rigid as banks and work to truly understand the cash flow cycles of the business in order to structure what is best for them and the credit union. WE don't make decisions based off matrices. Each situation and Member is different and therefore should be treated as such.
NW: What advice would you give a small business owner?
BM: Running a business is extremely difficult, as you know. With regulations, competition, Obama Care, etc., it can be incredibly difficult. Ensure you always have contingencies in place. Those contingencies all you to strategize through the various scenarios you may face as your business continues to grow. It allows you to be proactive, versus reactive.