Alliance Advisory Group Blog

It’s not your father’s (or mother’s for that matter) credit and loan market anymore.

Wal-Mart Stores Inc.’s Sam’s Club unit will test an online loan program with Superior Financial Group LLC that aims to help small businesses access capital.

Sam’s Club members who qualify for loans can borrow $5,000 to $25,000 from Superior Financial, the Bentonville, Arkansas- based company said today in a statement. The program is aimed at entrepreneurs and businesses owned by minorities, women and military veterans, the membership warehouse chain said.

Almost 15 percent of Sam’s Club business members reported being denied a loan in November, up from 12 percent in April, according to a survey conducted by the retailer. Only half of small businesses in the U.S. that tried to get loans last year got all or most of what they needed, Sam’s Club said, citing research by the National Federation of Independent Business.

Under the program, a $35 annual Sam’s membership enables businesses to apply for loans at an annual interest rate of 7.5 percent for 10 years, according to the statement.

Superior Financial Group is licensed by the U.S. Small Business Administration as a non-bank lender, according to the Walnut Creek, California-based company’s website.

Sam’s Club offers credit card processing for merchants and discounts on shipping as well as early shopping hours. Wal- Mart’s U.S. stores also offer financial services, such as check cashing and a Visa debit card.

The U.S. House of Representatives recently approved a small-business loan measure supported by Gov. Martin O’Malley (D) and state business Secretary Christian S. Johansson, who testified in its support last month.

The legislation would provide additional funding to allow states to guarantee loans for small businesses that qualify. The national proposal is similar to a Maryland program that guarantees loans through community banks. A companion bill is pending in the Senate.

Mary Bass, vice president of Bass Machining, said a state-guaranteed loan allowed her Baltimore machinery manufacturing company to obtain a larger loan to buy needed equipment and open a line of credit to help complete a project than if the company had obtained a loan without the guarantee.

While the company’s regular lender, Bank of America, had approved a loan, it was for less and would have required more personal assets to be put up for collateral than with the state-guaranteed loan the company received through The Harbor Bank of Maryland in Baltimore, Bass said.

The loan was easier to obtain than other loans she had heard about involving the U.S. Small Business Administration.

The company, which has made parts for customers ranging from the container industry to NASA, has 13 full- and three part-time workers, she said.

The House bill would provide $20 billion for states to expand their capital access programs in addition to an additional $30 billion small-business loan program.

Last month, Johansson, of the Maryland Department of Business and Economic Development, testified that small businesses employ about half of all workers, but find it difficult to get the loans they needed to expand.

“In the aftermath of Wall Street excesses, banks have been forced to adopt significantly stricter banking practices, which have reduced the flow of credit to their Main Street clients,” Johansson said.

“Expanding the capacity of existing State and U.S. territory small business loan guarantee programs offers a shovel ready solution to restore the flow of credit to our small businesses that have been crippled by tougher lending standards and devalued collateral,” O’Malley said in a statement.

So far, two businesses have received loans through the state program, while final approval is pending on eight others, for a total of $5 million in loans through community banks such as Harbor Bank, which has provided the two loans.