Sam's Stimulus

Wal-Mart founder Sam Walton’s vision when the first Sam’s Club opened its doors in 1983 was to, through the members-only warehouse retailer, bring the kind of savings on goods to small businesses that was available to big businesses with big purchasing power.

Now Sam’s Club is working with Superior Financial Group to step into a gap small-business owners say is hampering their ability to expand, and in some cases even function—financing. And that's just the first step in what Sam's officials hope will be a range of financial products for members, said a senior official with the company.

"We're going to go out there and find companies and products that understand the small-business space and bring those products to our members," Catherine Corley, vice president for membership, told Portfolio.com.

“We’re just trying to provide a range of options of loans that we feel are good.”

The company announced its new Small Business Administration lending program this morning, though it has been testing the program since May. It’s just one of several efforts to get money flowing to Main Street.

The Wal-Mart subsidiary and Superior Financial, a leading Small Business Administration lender, are going to make SBA loans of $5,000 to $25,000 available to Sam’s Club members who qualify. The emphasis of the program will be on making loans to businesses owned by minorities, women, and veterans, and the program will be run alongside programs already in place, such as low-rate merchant credit-card processing, order-ahead programs, and early shopping hours.

For the most part, members of Sam’s Club will be able to apply for the loans online, and the terms of the loans will be for 10 years at a 7.5 annual percentage rate. The loans will qualify for Small Business Administration Premier Outreach Express backing.

“Access to capital is a major pain point for our members and the small-business Main Street community,” said Corley, who also serves on the Small Business Development Council of the U.S. Chamber of Commerce, in a release. “We believe this pilot program is a step in the right direction to help fuel small-business growth and create jobs to stimulate our economy.”

A survey of small businesses showed the company it needed to do something.

“Fully one third said ‘I didn’t buy what I needed to buy at Sam’s Club because I didn’t have the money.’ It really motivated us to say, ‘We’ve got to find some solutions,’” Corley told the New York Times.

Corley told Portfolio.com it was a matter of matching the products with Sam's Club members.

“The SBA loan is perfect for this size of a loan,” between $5,000 and $25,000, Corley said. “We found a third-party financial lender who specializes in these types of loans.”

The lack of financing available to small businesses has been a constant concern since the financial markets collapsed with the bankruptcy of Lehman Brothers in 2008. Small banks, often the lenders of first resort for small businesses, have been put under stress by bad commercial real estate loans as small businesses have suffered lost sales—creating a vicious cycle.

The largest effort to infuse cash into the small-business economy is, of course, President Obama’s proposal that $30 billion be steered to small banks with the directive that it be loaned to small business. That effort remains bogged down in Congress, where Republican critics have called it a bank bailout in disguise.

Even big banks have touted their efforts to boost small businesses. JPMorgan Chase last week offered to cut rates on its credit cards for small businesses if those businesses hired.

Bank of America, Goldman Sachs Group Inc., and Citigroup Inc. have all boosted their commitments to small-business lending in recent months.

And efforts range from such giant banks and retailers to microlenders like the Opportunity Fund, which have increased their lending in recent years and have seen a big jump in applications for loans from small businesses. The microfinance lenders, generally supported by government agencies or nonprofits, loan an average of about $9,000, with loans capped at about $35,000

Fifty-seven percent of the organizations have seen an increase in applications for loans in the past year, Bloomberg BusinessWeek reports.

Tim Jochner, CEO of Superior Financial Group, said the effort his company is working on with Sam's Club is highly targeted to the businesses that most need credit. “Sam’s Club together with SBA’s premier outreach express-loan programs provide both a unique and powerful opportunity to reach and provide capital," he said.

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Kent Bernhard Jr. is News Editor of Portfolio.com