Sam’s Club, the membership discount warehouse division of Walmart Stores Inc., is testing an online program with Superior Financial Group to make loans of $5,000 to $25,000 to its 
member small businesses that qualify.
Borrowers don’t have to spend the money at Sam’s Club.
Its the newest attempt by private and government entities to help small businesses get the capital they need to grow and add jobs.
Small businesses are important to the economic recovery because they have provided almost two-thirds of the new job growth in the past 15 years but business lending has declined sharply since 2007.
“One of the keys to getting our economy growing at a normal rate of 3-4% a year is to get the banks lending again,” said Gary D. Halbert, president of ProFutures Inc. Here’s his bank lending chart (click on chart for a larger view):
Source: Gary Halbert. Federal Reserve
However, it’s still an open question whether small firms aren’t borrowing because they can’t get loans and lines of credit or because they are uncertain whether they will be able to pay the money back.
According to the latest monthly National Federation of Independent Business survey, 92% of small-business owners either didn’t want to borrow or had all their credit needs met. However, of the 32% that regularly tap credit markets, 13% more said they had difficulty getting credit than said they had no trouble.
“Access to capital is a major pain point for our members,” said Sam’s Club Membership Vice President Catherine Corley. “We believe this pilot program is a step in the right direction to help fuel small-business growth and create jobs to stimulate our economy. It’s also simple to apply and costs less…”
Sam’s Club members who apply for a small-business loan during the test period will receive $100 off the application fee and a 20% discount on the interest rate.
Recently, JPMorgan Chase & Co. made a stab at getting small businesses hiring again. It promises to reduce the interest rate on small-business loans by 0.5 percentage point for each new employee up to three.
CreditLoan blog says JPMorgan Chase charges a little higher interest rate (an average 6% vs. 5.5% national average) but a business could save as much as $4,000 over three years on a $65,000 loan.
And a couple of weeks earlier, Bank of America said it would increase its purchases of products and services from small to mid-sized businesses, spending $10 billion over the next five years. The annual amount will increase from $1.9 billion in 2009 to $2.5 billion by 2014.
Congress is trying to put some access to capital provisions in the small-business jobs bill currently in the Senate including:
- More money to extend the 90% guarantee and fee waiver on loans made through the Small Business Administration’ various loan programs. That higher guarantee expired in May.
- Increase the size of SBA microloans to $50,000 from $35,000
- Create a direct-loan program through nonprofit intermediaries
- Create a $30 billion fund to encourage community banks to loan to small businesses
- Create a $900 million fund for state and local government small-business loan programs.
The Sam’s Club initiative isn’t Walmart Stores’ first move into financial markets. Walmart Stores proposed setting up its own bank in 2007. It has offered a Wal-Mart prepaid debit card since 2007.
Click here to read Sam’s Club news release about its pilot small-business loan program.
Other business stories…
- O.C. company merges, moves to Canada
- Is California a sinking ship?
- O.C. manufacturer moves to Colorado
- Nevada wants to steal state businesses
- Can firm succeed selling air and water?
- 3rd generation entrepreneur starts firm
- Owner: Ariz. boycott can cause local layoffs
- 12 more firms on ‘Leaving California’ list
- Manufacturer leaves state for Texas
- List names 100 companies leaving California