Sam's Club offers small business loans online

In addition to cedar play sets, 55-inch televisions and thousands of other things, Sam's Club -- the Wal-Mart Stores' retail warehouse subsidiary - now offers loans to small businesses.

"Small business in general is a sweet spot for Sam's Club," company spokeswoman Kristy Reed said.

The program, which is in its pilot phase, will be offered online only, so there won't be loan officers at the stores. Sam's Club will market loans ranging from $5,000 to $25,000, mostly to businesses owned by minorities, women and veterans. Superior Financial Group will underwrite the loans, which will be backed by the federal Small Business Administration.

The decision to start making loans comes at a time when small businesses have had trouble getting access to credit and when the financial services industry, including non-bank lenders such as Sam's Club are about to be affected by new federal regulations.

"If anything, it just increases the need for this type of programming," said Catherine Corley, vice president of membership at Sam's Club.

Banks already have tightened credit as regulators seek to ensure that they remain sound.

"These types of loans are very difficult for them," Corley said of banks.

Bankers agreed, suggesting that those who get loans from Sam's Club probably wouldn't be able to get them from banks.

"Those are harder loans to make, generally," said Douglas Manditch, chairman and chief executive of Islandia-based Empire National Bank. "It's probably a well-intentioned program, for a segment of the market that has trouble getting bank financing. . . . I don't think banks are going to take on higher-risk lending right now."

Virginia Russell of Wyandanch, owner of VIP Basket Store, said she would consider getting a loan from Sam's Club if the rates were good and it wasn't too much of a hassle. She said she seeks credit every September for her home-based gift basket business as she gets ready for the holiday season.

"They might be a little more in tune [than other lenders] with the needs of a small business," Russell said.

Corley said the lending effort is not a precursor to Sam's Club getting into other banking activity.

Three years ago, Wal-Mart sought and failed to get a banking charter after bankers, lawmakers and other critics objected. Still, Wal-Mart and its Sam's Club subsidiary offer several financial services, including prepaid debit cards, check cashing and even credit card processing for small businesses.