Minge is a veteran credit union leader. He joined Texas Trust Credit Union in May 2011 as president/CEO, following an 18 year career at Randolph Brooks Federal Credit Union in Live Oak, Texas.
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)?
Jim Minge, President and CEO of Texas Trust Credit Union ("JM"): Business lending allows credit unions to invest in the communities they serve. By offering loans to small businesses, credit unions become part of the economic engine that aid job growth and creates thriving communities.When credit unions make business loans, it gives small businesses more options and reduces the likelihood that they will have to turn to alternative sources of funding. These sources not only cost the business more for a loan but they are more risky.
Texas Trust has helped many businesses over the years. For example, even in the midst of the recent recession we provided an SBA loan that offered financial relief to a custom cabinet maker. We consolidated all of this company's business debt into a single loan, lengthened the payment term, and lowered the rate in exchange for a 75 percent guaranty. By doing this, we provided a positive cash flow to support the company's daily operations, and helped the business owner save nearly $170,000 in annual interest expense.
NW: How do you see small business lending evolving in the next year? Any thoughts on future of the Member Business Lending Cap?
JM:The increase in business lending among national banks in the final quarter of 2012 could indicate the lending market is opening up. However, the lingering uncertainty about the economy and tax increases will keep some small businesses from making significant capital investments in the near term. Tightened lending requirements have also scared off some business owners by making it more difficult for them to obtain a loan. The increase would make an additional $13 billion available for lending to small businesses. This investment would certainly result in new jobs and economic growth. The Obama administration supports the increase and we hope that Congress will act on this. It would allow credit unions like Texas Trust to help businesses mitigate some of the financial decline they experienced over the past few years and help them move their businesses forward.
NW: Please describe your credit union and its unique difference.
JM:We are a community-based credit union, so we serve consumers within a select geographic area. We are a full-service financial center, offering checking/savings products, credit and debit cards, auto loans, mortgages, and small business lending. In 2012, we booked more than $14 million in business loans, including a number of SBA loans. Several things differentiate us in terms of lending. One, we are primarily a real estate-backed lender and we generally provide longer fixed term rates on owner-occupied real estate. Last year we were able to help a business that custom manufactures firearms purchase its own facility. The business had been leasing space, which it had outgrown. We were able to approve a $1 million construction loan with a 15-year fixed rate. The business owner was ecstatic about the loan. He knew he wouldn't have to worry about interest rate fluctuations and could better control his budget.
NW: What advice would you give a small business owner?
JM:Don't give up hope. As Americans, we are driven to succeed. If you need a loan, start by talking to community-based financial organizations, such as credit unions or community banks. We are more vested in the community and local businesses. Put together a dossier of your business. Includea business and marketing plan and a summary of your professional background and experience applicable to your business. Highlight prior achievements such as business expansion, revenue generation, and credit history. Include cash flow statements, personal credit reports, and other financial documentation. All this can help the lender determine your credit worthiness. If you are turned down, find out why and what is required that would make your business more attractive to a lender. Keep in mind that every lender has different requirements, risk thresholds, and policies, so you may have to talk to several before you find the right match.