Take it to the Bank – or Sam’s

Back in the old days, consumers got merchandise from their retailers, financing from their banks. But that was then, when the word “economy” wasn’t always attached to prefixes such as “difficult,” “struggling” or “rotten.”

With credit scarce, paychecks unpredictable and cash a luxury, some retailers have realized they have to be aggressive and step out of their boxes to help get people spending again.

Perhaps the most remarkable program is from Sam’s Club, which is kind of going into the loan-facilitation business. Sam’s isn’t lending money, but it is helping some of its price club members borrow funds.

The retailer recently says it will extend a program it has been testing since May to help its members get up to $25,000 in loans from the Small Business Administration. A financial group that is managing the loans will give Sam’s members a $100 discount on the application fee and lower interest rates once the loan is approved.

Sam’s gets $50 for each loan approved in the program. But that’s just quarters in the sofa cushion for Bentonville’s littler giant. The real incentive is freeing up liquidity and hoping the consumer spends it at Sam’s. Maybe the program requires the borrower to come to Sam’s for some paperwork. Or maybe Sam’s is counting on pure gratitude. But the idea is to generate store traffic and loosen up spending.

Last fall, Sam’s surveyed its small-business customers, a little under half of its membership that accounts for a little more than half of its revenues. “Fully one-third said, ‘I didn’t buy what I needed to buy at Sam’s Club because I didn’t have the money,’ ” says Catherine Corley, vp, member services. Since May, about 200 people have applied online for the test program and about 45 percent were approved.

One Sam’s member told about getting a $10,000 loan through the program at 7.25 percent over 10 years, after earlier being offered a commercial finance company’s loan with a 21 percent interest rate.

Sam’s says it is considering offering other financial products through third parties to help ease customers’ finances, like working-capital loans or peer-to-peer loans. “We’re not necessarily trying to be a bank,” says Corley, “we’re just trying to bring to our members the things they need.”

Of course, an SBA loan isn’t personal financing. Rather, it helps small businesses get money to hire personnel, buy equipment, do some marketing, etc. A win-win-win.

Congress may have waffled earlier this summer on whether or not an extension of unemployment benefits would stimulate the economy. But retailers live on the street, and they can measure how much a little excess cash in the pocket will drive consumer spending. So they’re aggressively trying to help make things happen. Good for them.