What comes to your mind when I mention how a credit union improves the social well-being of a community? Perhaps you think of how you are able to pass on lower rate loans or pay more to members than your banking counterparts. Maybe you think of a member who relied on the CU to help get him through a tough time when he was down on his luck. It kind of reminds you of Jimmy Stewart’s character, George Bailey, in It’s a Wonderful Life and how he made a difference in people’s lives compared to the Mr. Potter, who hoarded his wealth. Another thought may be a donation to some facility or charity that makes an impact in your community.
One item I rarely hear mentioned is how business lending from a credit union improves the social good of a community. I believe that commercial and agricultural lending provide one of the best methods a CU has to impact its territory. I’m sure I will have some naysayers who dispute my claim, but indulge me for a bit while I make my point.
Some will view the business owner as a greedy, profit-driven person whose only concern is improving his own station in life. But these same greedy, profit-driven people provide demand for loans and supply deposits for your institution. Often the loans are priced with a higher spread over your cost of funds than a normal consumer loan would be. This allows for increased earnings for the CU which benefits the members.
Consider the business owner or farmer’s family. The successful operation of the business allows a family to be supported. Personal items like a house, cars and college tuition can be borrowed from you, thus increasing the business at your CU. The successful owner generates additional cash that allows him to give back to the community. Some of the most generous people I know are business owners.
Consider the impact of the employees of the business. They are able to fund their lifestyle which will include houses, cars and tuition for their kids. The successful business will provide a living for many people. This makes these people better citizens, better neighbors, and better people. This is improving the society as a whole. And this occurs over and over again not just one time like a donation to a local charity.
In an age where class warfare is preached from some of our leaders and a record number of Americans have left the labor force, I contend that the business owner should be celebrated. The Non-Farm Payrolls data released on May 2, 2014, show the US workforce shed 806,000 jobs in April. This is a stunning drop that cannot be blamed solely on the weather. Both wage growth and hours worked were flat. This follows news earlier in the week that the economy is growing at a rate of 0.1%. The headline unemployment rate fell to 6.3%, but this is only since the labor participation rate is down to 62.8%, a rate that was last seen in the abysmal Carter Administration when there were far fewer women in the workforce. The rate for males in job participation is at an all-time low of 69.1%. The data is warning that any US economic expansion is in danger of halting. This is also coming at a time when the Federal Reserve is adopting a tighter money policy by trimming its bond-buying each month.
A friend of mine said he had an economics professor in college who told the class on the first day, “You should be thankful for the rich, because everyone who hires you for a job is richer than you. You should want to be taken advantage of by the rich, because if they do not, you will not have a job.” That is true. These people who have risked a lot in life have made our world a better place for all of us.
Every commercial or agricultural loan we have closed at MWBS has either added or retained jobs from the business client. The impact we have is families being started on sound financial footings, allowed houses and other items to be purchased, or sent kids to college. Many times, the greatest social good can be accomplished through your activities with your business or farm client.