SAGINAW, Mich. (11/18/11)--Many entrepreneurs have a personal story behind their small businesses. Alice Brown's story is a painful one.
Brown, of Saginaw, Mich., suffered a knee injury in a head-on car crash. Not one to take things sitting down, Brown designed a knee brace that eased her pain, helped her rehabilitate, and restored her normal movements.
She held such a belief in her homemade knee brace, she set her sights on creating a product line. But she faced one more hurdle: access to capital.
Brown turned to her local credit union, $643 million asset Wildfire CU, Saginaw, Mich., to provide her with the small-business loan she needed to market her knee brace.
"I wanted to share my product with others in the hope that it could help make their lives a little better," Brown told the Michigan Credit Union League. "Thanks to Wildfire's support, I've been given the opportunity to bring my knee brace to people who need it while creating jobs and contributing to the local economy. Without the help and support from my credit union, I never would have been able to see my idea through."
Today, Brown markets her knee brace through her online company, In The Groove. In addition to helping her customers relieve pain and maximize their mobility, she has been able to hire four full-time and one part-time employee.
"Our credit union is proud to have the opportunity to finance small business owners with big ideas like Alice Brown," said Linda P. McGee, Wildfire vice president of membership development. "Local innovators provide the new ideas that drive economic growth and create new jobs. The more we can lend to small businesses, the more positive the impact on our local economy."
It's part of a Michigan and nationwide trend: Credit unions are ramping up small business lending at a time when other financial institutions are stepping back. Michigan credit unions' small-business loans surpassed $1 billion for the first time in early 2011 with member business loan growth of 29% for the 12-month period ending June 30, according to the National Credit Union Administration. During the same 12-month period, Michigan banks' small business lending dropped 10.1%.
Lending has grown from $345 million in 2005 to more than $1 billion today. Last year, 33 Michigan credit unions pledged $43 million in loans to the Credit Union Small Business Financing Alliance, partnering with the Michigan Economic Development Corp. and the Michigan Small Business & Technology Development Council to help train entrepreneurs and fund new businesses in the state.
"Credit unions are stepping up to lend as other institutions are stepping back," said David Adams, CEO of the Michigan league. "Small businesses continue to struggle with access to low-cost capital and credit unions are providing a good alternative for certain types of small business loans."
The U.S. Senate Banking Committee is considering a plan to let credit unions lend up to 27.5% of its assets for small-business projects, up from the current cap of 12.25% of total assets. Increasing the small-business lending cap could potentially pump $13 billion into the nation's economy and create 140,000 new jobs in small businesses without any taxpayer costs, according to the Credit Union National Association, which along with credit unions nationwide, is urging Congress to pass the measure.