ST. JOSEPH, Mich. (11/21/11)--Like many businesses, Wolverine Metal Stamping, St. Joseph, Mich., was blindsided by the effects of 2008 financial crisis. Fortunately, the company had a local credit union to partner with when it needed financial support.
In 2008, Wolverine had signed a financing agreement with GE Capital. Wolverine planned to use the capital to diversify its product line and broaden its customer base. Then stock market crashed, and the economy went into a downward spiral. GE backed out of the agreement. Wolverine's prospects for obtaining financing from national lenders in the wake of financial crisis looked dim.
Then, $269 million asset OMNI Community CU, Battle Creek, Mich., stepped in to help provide Wolverine with the capital and financial expertise it needed.
"Omni Community CU really stepped up at a time when our company was on the brink, and thanks to OMNI's assistance, Wolverine is growing and creating local jobs," said Bruce F. Weber, Wolverine chief financial officer/treasurer. "When big banks left local businesses like Wolverine in the lurch, OMNI stepped up and came through. Its small business lending program has made a real difference to our company, to our employees and to their families."
Wolverine said it worked with OMNI to tap into programs from the Michigan Economic Development Corp. and the U.S. Department of Agriculture. The company eventually obtained $3 million in financing that will allow it to grow.
"Our credit union is proud to help local communities like Wolverine Metal Stamping grow and succeed in our community," said Ted Parsons, CEO of OMNI Community CU. "Supporting small businesses is the best way to foster job creation. OMNI Community CU is looking forward to continued partnerships with small businesses and anyone with a good business idea so together we can strengthen our local economy and help create more local jobs. Credit unions can do even more with the right pro-business, pro-growth policies that allow us to lend more to entrepreneurs and innovators in Michigan."
Credit unions are lending to small businesses at a time when other financial institutions tightening credit. Michigan credit unions' small-business loans surpassed $1 billion for the first time in early 2011 with member business loan growth at 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%.
Small business lending by credit unions in Michigan have 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.
The U.S. Senate Banking Committee is considering a plan to let credit unions lend up to 27.5% of total assets for small-business projects, an increase from the current limit of 12.25%. Increasing the small-business lending cap could potentially pump $13 billion into the nation's economy and create 140,000 new jobs without any taxpayer costs, according to the Credit Union National Association, which along with credit unions nationwide, is pressing Congress to pass the measure.