Sam's Club tests small business loans

By Catherine Clifford, staff reporter


NEW YORK (CNNMoney.com) -- Sam's Club, the members-only wholesaler owned by Wal-Mart, is testing out an online program to offer discounted loans to its small business customers.

The program is essentially a white-label arrangement with Superior Financial Group, the nation's most active Small Business Administration lender. Superior Financial, based in Walnut Creek, Calif., specializes in loans of $5,000 and $25,000, often made through the SBA's "express" program for smaller loans.

By applying for the loan through Sam's Club as a member, small businesses will get $100 off Superior Financial's loan packaging fee (typically $350 to $450, after the discount) and 0.25% off the market interest rate. Sam's Club gets a $50 referral fee for each loan funded.

The new Sam Club's venture launches amid a bleak credit landscape for small companies. Banks have slashed their lending portfolios and credit lines, leaving many companies scrambling to find the capital they need to operate. "Unable to find credit, many small businesses have had to shut their doors, and some of the survivors are still struggling to find adequate financing," a recent government study concluded.

That's one motive for Sam's Club to wade into the lending market: If customers are strapped for cash, they don't shop.

Small businesses "are a big portion of our business, so if we can help small business, that helps us," said Hiren Patel, director of financial services at Sam's Club.

Rival wholesaler Costco has tried three times to pair up with small business lenders. "The results have been underwhelming in each iteration," said Joel Benoliel, senior vice president at Costco (COST, Fortune 500). Costco linked up with Key Bank in 2000, American Express in 2003 and Capital One 2007.

"The assumption is that there is this big need, and we are all about small business as our members, so we have really, really tried over the past decade," Benoliel said. "In each case, the main problem was the same: we had low member approval rates."

Businesses that already have an established relationship with their bank tend to apply for loans with that bank. Those looking to apply for a loan through an alternate avenue aren't typically the most attractive customers.

"Maybe they will have success where we didn't," Benoliel said of the new Sam's Club venture. "The lending environment is entirely different since the last time we tried this in 2007."

The Sam's Club arrangement is an open-ended pilot program. "We will monitor on a monthly basis, report back to our executives on a quarterly basis, and see where we want to go with this," Patel said. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Questions & Answers



QHow does a florist sell more in this economy? We changed our business to designing weddings and events only, as the everyday flowers are not selling. We had to throw out too much product at the end of the week -- flowers are perishable! More
Get Answer
- The Flower Lady, Suwanee, Ga.
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.29%4.32%
15 yr fixed3.26%3.29%
5/1 ARM3.37%3.34%
30 yr refi4.26%4.29%
15 yr refi3.24%3.26%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:

Sections

P&G announces it is selling or closing about 90 smaller brands to focus on its 70 to 80 major brands. More

Terrell White has had a profit-sharing plan for his employees since 1981, believing that if the staff isn't happy, guests won't be either. More

Millennials are spending big money on coffee, alcohol and fast food. Here's where they're spending the most and how much, according to budgeting app Level Money. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.