Posts Tagged ‘mortgage & loan’
On Tuesday, the Federal Reserve confirmed what we have all been thinking for the last couple months – the US economic recovery is weakening. The health of our small businesses is acknowledged as being key to the recovery and many economists agree that the inability of small firms to obtain financing has stifled economic growth. Small businesses need loans to invest in capital and hire employees so that they can begin new projects. We need to have faith in these companies in order to break the negative cycle that is holding back the country.
I was therefore shocked to read in the Mintel Comperemedia Q2 2010 Small Business Lines and Loans Review that just 3% of business panelists had received a business loan offer via direct mail during the quarter; this is down from nearly 40% two years ago.
This fact is particularly alarming when you consider some of the bold statements made recently by banks as they compete to outdo each other with various lending statistics. I take my hat off to those banks that are not just talking-up their lending activities, but are also integrating those efforts with direct marketing campaigns. In other words, reaching out to small businesses, directly, in their time of need.
PNC, BBVA Compass and Chase are doing just that:
– PNC has been promoting its Cash Flow Options program in direct mail. Cash Flow Options encompasses a suite of loan products and the bank is offering a half-point reduction off its daily quoted interest rate plus a 50% reduction off the loan origination fee.
– BBVA Compass has been sending offers to small business owners promoting unsecured lines of credit and business loans. Lines range from $10,000 to $250,000 with interest rates as low as 6.00%. For 5-year term loans of $100,000 or more, small business owners can get a rate as low as 5.18%.
– Chase’s Loan for Hire campaign is the most noteworthy campaign of the national banks. Small businesses can get a half-point rate discount on each employee they hire up to three. Also, if you have a business checking account with Chase, you get another half-point discount on top of that for a total of 2% off the published daily interest rate. We haven’t seen a direct mail campaign promoting Loan for Hire yet, but Chase has blanketed the country with print and radio advertisements and has been promoting the product in its branches.
The PNC, BBVA and Chase examples are encouraging, but clearly it is not enough to keep economic recovery strong. Another positive sign is that small business credit card marketing is up significantly. This will be invaluable for many small firms as they struggle to stay afloat.
It’s time for business lending to follow suit and pull this country clear of the great recession once and for all. Yes, a rallying cry for small business marketers; nothing less than our economic future is at stake.
AIG recently reported a 4th quarter 2009 loss of $8.9 billion. Though this is substantial, it is a significant improvement from the $61.7 billion loss reported at the end of 2008.
American General Financial Services (AGF), the company’s lending operation, reported a 4th quarter 2009 operating loss of $309 million compared to an operating loss of $248 million in 2008, resulting from “a decline in finance charge revenues reflecting lower average net receivables and a higher provision for loan losses.”
In its quarterly earnings report the company goes on to state that AGF anticipates that its primary source of funds to “support its operations and repay it’s obligations” will be customer receivable collections and additional on-balance sheet securitizations and portfolio sales.
As a result, AGF has stepped up its efforts to acquire new customers. In January, US consumers received more than 8 million mailings for new personal loans from AGF, up from less than 1 million a year ago. This accounted for 26% of all personal loan mail volume during the month. In contrast, Discover, the second largest mailer in January mailed 5 million mailings and Citibank mailed 3 million.
AGF faces an uncertain future. The AIG earnings report states that the company is exploring “strategic restructuring opportunities” for AGF. However, indications from the mailbox in January suggest that AGF is determined to build up its loan portfolio and strengthen its position in the marketplace.
In December 2009, Advanced Financial Services changed its name and rebranded as Embrace Home Loans. This was a significant move for a company that has been in operation since 1983. Advanced Financial Services used direct mail as its primary marketing channel and in Q4 2009, we began to track the first direct mail offers branded as Embrace Home Loans.
Advanced Financial Services actually remained profitable despite the downturn so, therefore, the rebranding is more about tapping into its potential for future growth. Commenting on the name change in a press release, Kurt Noyce, President of Embrace Home Loans, said, “we now find ourselves in an enviable position with many opportunities for future growth, but our name hasn’t kept pace with that growth. We have not been available in all markets and were easily confused with many other financial services companies. So we decided to make a change with a name that defines not only what we do, but also what we care about.”
The launch includes a new website that promises to “help customers feel comfortable and secure every step of the way.” The site features customer testimonials from the 46 states Embrace operates in, as well as video recordings of staff explaining how they have helped customers.
Most of the offers from Embrace Home Loans in Q4 2009 utilize a black-and-white version of the orange Embrace logo and the same creative that was mailed under the Advanced Financial Services brand.
Some offers, however, reveal a new orange logo and the message, “embrace the possibility.” These offers tap into Embrace’s new values. For example, in one marketing piece, a Post-it note adds a personal touch and the text is customer centric in its focus. The offer explains how Embrace wants to save its customers money because rates are at historically low levels.
The Embrace rebranding follows the launch of the Bank of America Home Loans brand in April 2009. These two firms are currently the top two direct marketers in terms mortgage acquisition mail volume. The rebranding efforts are encouraging because both lenders are re-positioning themselves to take advantage of a potential recovery in the mortgage market.