Seven Seventeen Woos Business With Free Checking
WARREN, Ohio -- Seven Seventeen Credit Union is ardently wooing small-business owners with its revamped “Free E-Business Checking.” Not only does the credit union impose no charge on all electronic checking transactions the member makes, it imposes no charge on the first 200 paper checks written or deposited each month. Same for cash deposits.
No monthly fees and no minimum balance requirements, emphasizes Christine Hughes, business development manager at the third-largest credit union in Ohio. And “a low per-item charge of 25 cents if the business owner goes over 200 [paper or cash] items.”
The redesigned Free E-Business Checking was launched Oct. 1. Once small-businesses discover the ease of using Seven Seventeen to make and collect payments – in most instances for free – they’ll take advantage or fuller advantage of the other business banking products, Hughes says, including its cash-management services.
As an added incentive to sign up for Free E-Business Checking, business owners who are members and open a business checking account before Dec. 31 will have $100 deposited in their accounts if they also receive their monthly activity in an “e-Statement and use their debit card 25 times in 90 days,” Hughes says. “We want to encourage electronic use.”
With Free E-Business Checking comes a business debit card, NetWorth24 Online Banking, eStatements, Mobile Banking and online check images.
These products, Hughes observes, are no longer seen as adding value to a relationship. “People expect them,” she says.
In addition, the number of telephone conversations with members is declining. “Increasingly we’re using email to communicate,” Hughes expands, “not just about something that has to do with their account but fraud alerts. And you can get an [automatic] alert that the balance in your account has fallen below the level you set.”
Providing credit and merchant services to small businesses has grown 16% annually the last three years, reports Eric Lanham, senior vice president and head of its marketing department. It’s a rate of growth the credit union wants to continue, he says.
As of this month, Seven Seventeen has a commercial lending portfolio of $58 million, $16 million of that sum booked this year, says commercial lending officer, Brett Carnahan.
Roughly 15% of Seven Seventeen’s business-banking customers are professional offices (lawyers, physicians, accountants) and trucking firms have increased their share of the portfolio with the development of the Utica share. “We do a fair amount of financing for rolling stock with shale,” Carnahan says.
The credit union also extends credit to hotels and churches. Of the latter, Seven Seventeen can help a religious body refinance its debt, finance renovation of the building where the congregation worships and the residence of the clergyman. Congregations in need of more space can obtain credit to buy real estate.
“We see picking up more business as people learn more about us,” Hughes says, both for-profit and nonprofit organizations.
The most Seven Seventeen can lend to one member business is $10 million. “We have financed some big deals,” Carnahan says, then adds the average amount a business takes out runs between $250,000 and $300,000.
Carnahan, supported by credit analyst Kim Vought, extends credit so small-businesses can buy equipment and real estate, inventory and otherwise secure working capital. Seven Seventeen allows businesses to accept and process credit cards as well as make merchant payments through its cash management product.
Seven Seventeen engages in asset-based lending.
It works with the Small Business Administration when the federal government isn’t shut down. Most SBA lending is the agency guaranteeing repayment of 85% of the sum advanced.
The credit union requires the member to have at least 25% equity in his residence before it approaches the SBA, Carnahan says. Depending on what the business owner wants to finance, the SBA will guarantee loans of anywhere from seven to 15 years.
“Our business loans require personal guarantees,” Carnahan says. “We think this helps keep our delinquencies low. I know we’re below our peers.”
One exception is computer systems the owner might want to buy. Because of how rapidly computers and software become obsolescent, the longest Seven Seventeen (and the SBA) will go is five years, Carnahan says.
Rarely does the credit union deny a loan to a business owner, Carnahan and Hughes say.
“We have a lot of dialogue in the beginning,” Carnahan explains. “We spell out our underwriting standards.” When the SBA is involved, “It’s there to help with collateral deficiencies,” he explains.
So if a loan can’t be approved or the request modified, the applicant is aware of what he must do to qualify so credit can be extended.
EDITOR'S NOTE: First published in the MidOctober edition of The Business Journal, published today.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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