The lack of small business credit availability is, obviously, a huge issue these days. Lending standards have gotten tighter, banks have reduced their credit offerings and many small businesses report they can't get the credit they need to operate and grow.
Sam's Club, the members-only wholesaler owned by Wal-Mart, is looking to help fix this problem. They are piloting a program that offers discounted loans to their small business customers.
Sam's Club small business members can apply online for loans between $5,000 and $25,000. The loans are made by Sam's Club partner Superior Financial, a non-bank United States Small Business Administration (SBA) Lending Company.
Sam’s Club members who apply for a small business loan online during the test phase will receive $100 off the application fee and a 25 basis point discount on the loan rate (click here for fee and loan details). The loan term for this program is 10 years. Sam's Club gets a $50 commission on each loan.
We find this program interesting for several reasons:
1. The program makes it quick and easy to apply, with approvals and funding happening as quickly as a few days. This is a huge advantage over the often laborious and time consuming efforts associated with most small business loans.
2. Wal-Mart's involvement will greatly increase the visibility of the SBA's 7 (a) Express Loan programs. While these programs have been in place for some time, few small business owners are aware of them.
3. This program is a good example of the broader trends towards increased large corporation/small company cooperation and large corporations providing support services for their small business customers and partners. We cover this trend in more detail in The New Artisan Economy research report.
At $50 a loan, this program won't be a big direct money maker for Wal-Mart, although they may benefit from customers being able to buy more from them using the loan proceeds. There are also clear PR benefits from this program.
But Sam's Club's biggest payoff will likely come from creating stronger and more cooperative relationships with their small business customers.