Sam’s Club Helps Small Guys Get Loans

Discussion
Jul 07, 2010
George Anderson

By George Anderson

Getting credit is not always easy for new business owners,
but now one very large business, Wal-Mart’s Sam’s Club division, is working
to help members get loans of up to $25,000 through the Small Business Administration.

Catherine
Corley, vice president of membership at Sam’s, told Dow Jones
Newswire
, "Access
to capital is a major pain point for our members and the small-business Main
Street community. We believe this pilot program is a step in the right direction
to help fuel small business growth." Roughly 15 percent of Sam’s members
who own businesses reported not being able to obtain loans in a survey last
November.

Sam’s isn’t directly responsible for handing out loans, but arranges
for its members to apply for loans at Superior Financial Group. The club’s
members get a 20 percent discount on loan fees and there is no collateral requirement.

The
loan program is geared to help very small businesses and those owned by minorities,
vets, and women.

"It seems like a traditional program done in a unique way," Carl
Tobias, Williams professor at the University of Richmond School of Law, told Dow
Jones
. "It
benefits Sam’s by potentially adding members and can aid existing members."

Discussion Questions: What do you see as the pros and cons of Sam’s involvement
in helping club members apply and get SBA loans? Will others follow Sam’s lead?

Please practice The RetailWire Golden Rule when submitting your comments.

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11 Comments on "Sam’s Club Helps Small Guys Get Loans"


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Steve Montgomery
Guest
10 years 10 months ago

Sam’s continues to work hard to win over small businesses such as c-stores. Many of these owners are not familiar with the companies who may distribute similar goods, not able to make the minimum orders they require and unwilling to submit to their credit policies. In some cases, their purchase decision is based simply on hard cost making it difficult for those distributors who deliver to compete.

By adding additional services, Sam’s is further cementing their relationship with those that do avail themselves of a loan. Even those that don’t take advantage of this offer perception of Sam’s as a friend of small business is likely to improve.

The traditional distributors are not likely to follow Sam’s lead into this type of service. In many cases, they have found that pursuing those that embrace Sam’s pick up business model is not cost effective.

David Biernbaum
Guest
10 years 10 months ago

Interesting that Sam’s Club is helping small businesses get loans. This is a great strategy on so many levels. In effect, Sam’s Club is helping to build its own customer base. It also positions Sam’s Club as a company interested in helping minority business owners and it helps also to stimulate the economy by providing self-employing entrepreneurs a chance to earn new income. Good steps being taken by Sam’s Club.

Bob Phibbs
Guest
10 years 10 months ago

Great publicity program that compliments their attention to small biz. Does it cross a line by being too far from their core competency? Only time will tell.

Roger Saunders
Guest
10 years 10 months ago

Sams Club has a consistent pattern of ‘hitting singles and doubles’. This one puts more men/women on base in building their businesses–particularly the among Sam’s Club customers.

Based on the June Consumer Intentions & Actions (CIA) Survey, the Sam’s Club member indexes at 130 compared to the General Population in terms of Business Owner as an Occupation. They also are more affluent, indexing at 116 vs. the General Population.

Nice job of listening to their customer. It should pay off in a very effective manner for all sides.

Cathy Hotka
Guest
10 years 10 months ago

Retailers are always talking about creating loyalty programs that extend beyond the discount. Here’s one that truly achieves that goal.

Richard J. George, Ph.D.
Guest
10 years 10 months ago

Sam’s Club approach is very simple: solve your customers’ problems and that will solve your problems. The key to this strategy is the differential advantage that this program gives Sam’s. Every club store touts low prices, pre-picked product, extended hours for businesses, and a variety of insurance and travel programs. However, this program’s uniqueness may very well be a tie-breaker for a small business determining which club store to join.

Marketing is a race with no finish line. This will give Sam’s an advantage until the other major players do the same. Then another problem-solving innovation must be launched. The race will continue.

Carol Spieckerman
Guest
10 years 10 months ago

Whether it’s Walmart reaching out to the unbanked and facilitating pay-as-you-go access to any number of services or Sam’s offering business loans, Walmart continues to see opportunities and break down barriers where others put up velvet ropes. As Walmart gets more aggressive in urban markets and plows ahead in emerging markets, these moves build a foundation for future loyalty, and in some cases, dependency. Great strategy.

Ed Rosenbaum
Guest
10 years 10 months ago

Sam’s Club involvement in assisting members get small business loans is an interesting situation with potential win/wins for all involved.

First, let’s call this what it appears to be; and that is an affiliate program set up to assist both the lending arm, Sam’s Club, and the borrower. Sam’s Club has nothing to lose doing this and a lot to gain. It is an investment in good community relations. Sam’s becomes the good neighbor.
Sam’s Club’s win is an increased satisfied customer base telling others about the program. The lender obviously gets the benefit of Sam’s Club’s membership list. Need I say more about the value of that? And, the borrower gets this great chance to get the capital to build the business.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 10 months ago

While I agree with the other posters here that this program is an excellent way of providing a unique customer service and building loyalty, Sam’s Club is also exposing itself to a good amount of risk. It is engaging in a complex area where it lacks expertise (I understand their partner will handle the heavy financial lifting, but Sam’s club is still wading into tricky waters) and also exposing itself to bad/defaulted loans, especially if we experience a double dip recession. I’d classify this as high risk/high reward.

Bernice Hurst
Guest
10 years 10 months ago

While one part of me thinks it’s a good idea to help small entrepreneurs, another part thinks this just may not work. For example, the story I read in the NY Times cited a guy who got a loan, bought another delivery truck, hired staff and is now saving up for another loan to expand his business further. As the story says, “if the point of it was to free up his cash at Sam’s, it didn’t quite work. He is saving again so he can get another Sam’s Club loan in six months and buy another delivery vehicle. ‘It’s not like it made me spend more than I normally would.'” Then there is the issue (oxymoron?) of responsible lending. Is it really a good idea to encourage people to spend money rather than saving for the next (arguably inevitable) rainy day?

John Crossman
Guest
John Crossman
10 years 9 months ago

I love they idea. It is creative as they make their own customer. I say, way to go!

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