Small Businesses Benefit From Multiple Accounts, One Relationship

by Darla Dernovsek

Putting all his business in one credit union gives Bryon Wolf more than convenience for his personal and small-business banking needs. It also gives him the comfort of knowing that the people at his financial institution truly understand his small business.

Wolf is the owner of Wolf Drywall in Beloit, Wis. His business was founded to provide drywall services for contractors and homeowners and recently expanded to offer new home construction. Wolf relies on First American Credit Union in Beloit for financial services, which include a mix of personal and business loans and deposit accounts.

Wolf praises Ed Hansen, vice president of lending at First American, for understanding his needs and working hard to help build Wolf's business. They meet every six months to review Wolf's status, including current needs and plans for the future.

"I feel a lot more comfortable, because Ed knows my business," Wolf says. Between meetings, Wolf appreciates the convenience of conducting transactions either online or at any of the credit union's five branches.

About one-third of credit unions offer small-business services. About one-third of those credit unions (12%) offer business loans. However, many consumers use home equity loans and personal loans to help with small-business needs. Ask at your credit union what business services it offers.

Building the relationship

Like Wolf, many small-business owners are finding that credit unions are equipped to meet a wide range of personal and business needs. That saves valuable time and money for small-business owners struggling to accomplish everything they need to do in a day. First American's Hansen says it also provides better service, because a loan officer who knows all aspects of a member's financial situation can provide a more intelligent response to member requests.

Equally important, an expanded relationship often pays off financially because the loan officer can make wise recommendations for day-to-day services as well as long-term planning. For example, Hansen knows that Wolf's business qualifies for free small-business checking, rather than fee-based services aimed at larger businesses with a high volume of checks. First American also charges lower fees and interest rates when the credit union has all the member's business and personal accounts.

"It all comes down to the relationship that you build between the credit union and the member," Hansen says. "When there's a full relationship, the credit union is going to be able to react quicker, more accurately, and hopefully give the member some good advice along the way."

Surviving tough times

That relationship can pay valuable dividends when a business hits a rough patch, according to Mark Taber, partner at Virchow Krause and Company, LLP, Madison, Wis. Taber is a former business banker and small-business adviser who helped the Credit Union National Association develop training seminars for credit unions that offer business lending.

Taber advises small-business owners to take time early in the life of their business to find a good loan officer--someone they can work with for a lifetime. A good business loan officer will build an intimate understanding of the owner's business and personal needs over time, which gives the loan officer the background required to offer effective advice on business growth, personal retirement planning, and even handing the business over to the next generation.

"Where the test really comes is when a small business gets in trouble," Taber says. If a business owner has multiple business and personal accounts at the credit union, the credit union has added incentive to work with the business owner when times are tough. "If the credit union has the entire relationship, it has to take that into consideration. Oftentimes the credit union will come up with different solutions and may go that extra mile for the member who has the entire relationship with the credit union. It clearly has an impact."

That lifetime relationship can create an invaluable reputation for a business owner, according to Bert Bryan, vice president of business services at Eastern Financial Florida Credit Union, Miramar, Fla.

"It's really very important from a credibility perspective, and as a small business, their greatest asset is that credibility in the marketplace," Bryan says.

Reaping the rewards

The combination of credibility and loyalty may yield unexpected rewards, according to Larry Accola, senior vice president at Royal Credit Union, Eau Claire, Wis. When interest rates dropped, Royal Credit Union loan officers called business members with existing loans to encourage them to refinance at a lower rate to save money. Accola says business members often were surprised to learn that the credit union put helping members ahead of generating higher earnings.

Small-business owners also reap rewards when a credit union understands the needs of business owners and then adapts services to make the owner's life easier, according to Frank Berrish, president and CEO of Visions Federal Credit Union, Endicott, N.Y.

Visions learned that it was a burden for some businesses to travel to the credit union to deposit checks because it pulled the owner or other employees away from serving customers. The credit union equipped the businesses with magnetic ink character recognition (MICR) readers, which translate information printed on checks in magnetic ink into digital images. Now the business can scan the checks into the computer and submit them for deposit online without visiting the credit union. Participating businesses included garbage services located in rural areas and small medical and dental offices.

Growing together

While it might seem to go beyond their job titles, business loan officers say they often remind small-business owners to balance their business and personal financial needs. That may include a reminder that the business owner needs to establish a college fund for a first-born child, or a suggestion that it's time to think about how to use the business to generate retirement income.

At Visions, for example, Berrish says loan officers may encourage business owners to establish retirement accounts with tax benefits, such as 401(k) plans and simplified employee pension plan IRAs (individual retirement accounts), commonly known as SEP-IRAs. Visions also offers trust services, which can be used to help transfer the business to heirs while minimizing tax obligations.

While business and personal needs will vary--as will the services available at individual credit unions--all the experts agreed that credit union members benefit from growing a lifetime relationship. When both sides work together throughout the life of the business, Taber says it can create a "rock solid" business advantage.

"The deeper the institution's relationship is with you, the greater the fundamental advantage that you will have," Taber says.

Published March 14, 2005

  Home & Family Finance® Resource Center
  Copyright © 2009 - Credit Union National Association, Inc.