Newest Sam’s Club perk: SBA loans

Let’s see. Thirty-five pounds of peanut butter, check; a gallon of ketchup, got it; 600-pack of plastic forks, yup. And one more thing – a $25,000 small business loan.

Sam’s Club hopes to help its customers with more than bulk buying through a new partnership with Superior Financial Group. The retailer announced on July 6 its trial online program to provide business members with Small Business Administration loans of $5,000 to $25,000.

Sam’s Club members will receive $100 off the packaging fee and an annual percentage rate of 7.5 percent – a 25 basis-point reduction – for any of Superior’s loan products. The loans carry a term of 10 years, with no pre-payment penalties.

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“For us, partnering with a retail store is pretty unique, but the way we’re handling it is similar to our other resource partners,´ said Tim Jochner, chairman and CEO of Superior.

Sam’s will act as a referral mechanism to Superior’s proprietary online pre-qualification system. Pre-qualification, which checks an applicant’s eligibility against SBA requirements, takes about three minutes. It’s the fast, online program that allows Superior to partner with companies and organizations across the United States, according to Jochner.

Superior was formed in 2005 as a non-bank SBA lending company, one of only 13 licensed in the United States. Jochner explained that the non-bank licenses were originally distributed to provide more small-dollar SBA loans, because many bank lenders focus on larger loans. Superior’s focus is on providing loans to minorities, women and veterans through several SBA programs.

So far, the response has been a bit overwhelming, Jochner said. The company is seeing 300 applications per day through its system versus the more typical 50 apps per day before the Sam’s program was announced. Despite the surge in traffic, Jochner said the online system is still running smoothly.

In announcing the program, Sam’s pointed to a recent National Federation of Independent Business survey that illustrated today’s tight credit market. Only about half of the small business respondents who had attempted to borrow money last year received a portion of or their entire loan request. By comparison, about 90 percent of survey respondents reported ready access to capital in the mid-2000s.

The program also adds to its parent company’s ever-expanding ties to the world of banking and finance. Wal-Mart Stores Inc. has long shown interest in getting into the banking biz. It has made several unsuccessful bids at gaining bank status in the United States, most recently a 2007 attempt to purchase an industrial bank in Utah.

This summer, the company received final approval to form Wal-Mart Canada Bank. The financial institution just launched its first product: a rewards MasterCard that gives in-store dollars back on purchases made.

Wal-Mart is offering U.S. customers financial service through partnerships and perhaps most significantly at its in-store MoneyCenters. The 3-year-old centers offer products and services including check cashing, bill payment, money transfers and the reloadable Wal-Mart MoneyCard.

In March, the 1,000th MoneyCenter opened, and the company announced plans to open an additional 500 by the end of this year. That would mean MoneyCenters in 40 percent of all the nation’s Wal-Mart stores.

Wells Fargo Financial closes

Not all companies are banking on the financial “store.” Wells Fargo & Co. recently announced it would shutter its 600-plus Wells Fargo Financial locations and disburse the division’s product lines to other business units.

Wells Fargo Financial employs 14,000, but only 2,800 positions will be lost with remaining employees reassigned. In Colorado, there are 15 Wells Fargo Financial locations, one in Fort Collins at 1112 Oakridge Drive. A query regarding the number of Colorado employees impacted by the move was not returned in time for publication of this story.

The company said the reason for the restructuring was the 2008 purchase of Wachovia, which essentially doubled its locations and made it no longer economically feasible to maintain the separate Wells Fargo Financial.

About a month ago, around the same time Wal-Mart was launching there, Wells Fargo Financial closed its Canadian locations.

Wells Fargo Financial spokeswoman Erin Downs explained that the subsidiary generally offered affordable loans for consumers with less-than-perfect credit. Consumer products included auto loans, mortgages and credit cards. All of the products, except non-prime portfolio mortgage loans, will be continued under the restructuring.

“We’re committed to serving customers across a wide variety of credit profiles,” Downs said, adding that customers will still have access to the FHA mortgage program.

On the commercial side, Wells Fargo Financial offered products ranging from financing for practice acquisition in veterinary medicine and dentistry to private-label credit cards for retail stores. All of the commercial products will also continue in other business units.

Kristen Tatti covers the banking industry for the Northern Colorado Business Report. She can be reached at 970-221-5400, ext. 219 or ktatti@ncbr.com.