Credit union came through when banks wouldn’t

The Gazette Opinion Staff
Published: April 29 2012 | 12:01 am - Updated: 3 April 2014 | 5:27 pm in

By Robert H. Sternowski

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I retired from Rockwell Collins in 2003 after 34 years in the engineering and management ranks, and started a small business in the aerospace electronics business.

We were strictly a “bootstrap” startup: zero capital, three engineers, a rented store front, and used furniture and equipment.

We served primarily the government/military market, doing electronic design and prototype work. Our first big break came when we got the opportunity to manufacture what we were designing, a much more profitable endeavor.

By this time we were about 14 people and growing on contract awards and commercial orders, and we weren’t going to be able to undertake the manufacturing effort at hand unless we could get a loan or line of credit to finance the work for our orders.

I went to the local banks — and was scoffed at by all. The reasons: You don’t have 100 percent collateral, purchase orders are meaningless, the net worth of the company is too little, you are in the high-risk government business, and you have no track record. Basically every excuse in the book was thrown at me. All I wanted was a 90 to 120-day note in the amount of $300,000 to finance inventory and build costs for an approved blue-chip purchase order in-hand.

So much for the local banks (both small and big) doing their “thing” to help drive the local economy.

Then I turned to my credit union, Collins Community Credit Union, where I had been a member for more than 30 years. They were willing to work with me, listened, offered suggestions, and finally gave me the line of credit I desperately needed to pull off the manufacturing order. We completed that order, and that was our steppingstone for further growth. We are now 25 people and going strong in a new, larger facility.

I now get cold calls from many of the local banks offering the moon in loans and services. They, of course, ask who our bank is, and when I tell them, they denigrate credit unions. I politely answer: I’m sorry, you made your own bed, now sleep in it. I already have a really good financial partner, and no one can prove to me otherwise.

I am one of the folks supporting the credit union effort for a larger commercial loan ceiling because it will benefit us as a customer, as well as our employees and our community.

So what’s the moral of this story?

l Despite the “charter” of the banks to serve their communities, they didn’t in our case. I am not alone. In my humble opinion, the banks alone are responsible for people looking for an alternative to banks.

l Collins Community Credit Union took time to listen, know me and calculate the risks on what we were doing. It looked like a reasonable proposition to them, and it was. I never even got that far with the banks.

l A small business startup has a great deal in common with the “low and moderate income” customer base that John Sorensen (Iowa Bankers Association, April 15 guest column) says is the province of credit unions. My credit union never applied that class-conscious measuring stick to me.

I’ve made my choice for a long-term relationship, thanks primarily to the intransigence of the banking community.

I encourage Senators Chuck Grassley and Tom Harkin to support the credit union’s efforts to raise their small business lending ceiling.

Robert H. Sternowski of Marion is president of Softronics Ltd. Comments: bobs@softronicsltd.com

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