Sam’s Club, a membership-only discount warehouse club, is now offering business loans to their small business members.
Over half of Sam’s Club’s members are small businesses including convenience stores, restaurants, offices, daycares and schools,and motels.
In May, Sam’s Club started testing a program where members could apply for a business loan. The idea: an infusion of cash could encourage business owners to purchase office supplies and equipment that they might be postponing.
Offering $5,000 to $25,000 loans would have the biggest impact
Sam’s Club spokesperson Kristy Reed says, “We found that for the size of businesses our members own, offering $5,000 to $25,000 loans would have the biggest impact.” Reed says with more traditional institutions, it’s difficult to get these smaller size loans.
Still, why would someone go to Sam’s Club for a small business loan?
Reed says, “We don’t charge an application fee. If a small business owner is not approved for the loan, they don’t have to pay anything.” Reed also says the overall fees for processing the loan are about 20% less than typical costs, and Sam’s Club was also able to negotiate a lower interest rate — the Sam’s Club rate is 7.5 APR, which is a 25 basis point discount.
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The Sam’s Club small business loan pilot will focus on serving Main Street minority, women and Veteran owned small business owners as well as micro-entrepreneurs under the SBA’s Premier Outreach Express products such as Community Express, Patriot Express and Export Express loans.
Sam’s Club is partnering with Superior Financial Group, the largest Small Business Administration (SBA) lender in the country.
While the program is too new to show trends, early data indicates that Sam’s Club is approving slightly less than the national average for small business loans. Reed says about 44% of their members are being approved for the small business loan. “Only half of small businesses that tried to borrow money last year got all or most of what they needed, according to a survey by the National Federation of Independent Businesses,” said Reed.
Other retailers trying to get small business owners to spend money
Other retailers are trying to get small business owners to spend money by offering cash-back type promotions Target, Kmart, Sears and Toys R Us are all offering major discounts to their customers.
Office Depot is perhaps the most aggressive of the office supply retailers. Spokesman Jason Shockley told Walletpop via email that the store is giving bonus rewards to members of its loyalty program, recently offering 100% back in rewards on everyday supplies including water, pads of paper, plastic storage, pens, batteries and binders, and 50% back in rewards on all case paper and copies from the copy and print depot.
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Source: http://www.blogher.com/loans-social-media-retailers-scrambling-figure-out-how-get-small-business-owners-spend-more-money?wrap=blogher-topics/small-business&crumb=32391
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