Small business play an important role in the community. They help keep the local economy going as well as bring people closer together. Diablo Dog is one such small business, and one that needed help when the time came to open up a storefront and get the supplies needed for dog training and grooming services.

Sarah Snell Cooke, co-founder of The Credit Union Connection, talked with Travis Credit Union VP of Business Lending Shane Knighton and Diablo Dog Founder Matt Heikkila to discuss how small business lending is beneficial to credit unions as well as the small businesses and communities they serve. They also talk about the growth of Diablo Dog and how the partnership with Travis Credit Union is likely to expand as Diablo Dog expands.

Check out the slideshow of pups and read the full transcript below:

Disclosure: Transcript is automatically generated.

Sarah Cooke 00:02

Welcome to The Credit Union Connection. I am your host, Sarah Snell Cooke. I am here today with two really interesting people with a really interesting story. On my left, probably you're right. I've got Shane Knighton, who is the Vice President of Business Lending at Travis Credit Union. Welcome.

Shane Knighton 00:24
Thank you. Thank you for having us.

Sarah Cooke 00:27
Yes, thank you for your time. Appreciate it. And the founder of Diablo Dog, which is really cool business, Matt Heikkila. Welcome.

Matt Heikkila 00:36
Thank you very much for having me. Absolutely. So,

Sarah Cooke 00:40

you know, we were kind of connected because of this cool partnership you guys have supporting the local businesses, Travis. And so can you? I guess, first Shane, do a little more intro on yourself and talk about the kind of mission and vision for Travis Credit Union? Sure.

Shane Knighton 01:01

So, as you said, Shane, I'm the vice president of business lending here at Travis Credit Union. I've actually only been here for a few months, but I've been in the credit union space for just about 20 years now. So this is sort of a passion for me. I've worked with small businesses throughout my career, including SBA lending, or Small Business Administration lending. And you know, it's really just kind of an exciting thing. I've, I've really enjoyed it because no two businesses are alike. I absolutely love the stories they tell. I love the creativity and passion that business owners have. And it's sort of sparked my own passion to serving those small businesses, which, you know, really does align with Travis's core values of serving our communities. And I'll talk a little bit later about, you know, what that exactly means to us.

Sarah Cooke 01:48

Yeah, appreciate it. Thank you. So Matt, you are a member of Travis, and talk a little bit about Diablo Dog, because you defined you identified a need, and launched your business back in 2013. And talk a little bit about the origin story, if you will, where you are today.

Matt Heikkila 02:10

Okay, so I think it might be good to go back even further. I was one of those kids who loved animals, you know, growing up, I wanted to be a veterinarian. And then I decided against that because of the harder aspects of that sort of job. When I was in high school, I stumbled upon a show about a program that's called the Teaching Zoo and Moorpark College, and later attended that program. And I've worked with all sorts of animals there, learned all sorts of aspects of animal care, like veterinary care, and, you know, behavior and sort of everything else. And then I worked with tigers after I graduated that program in New Jersey, for a very cool, sort of educational entertaining tiger program. And then after four years, that program ended and I moved back to the Bay Area where I'm from, and I started walking dogs in Oakland, kind of doing what I'm still doing today, but for another company. And then, about a year after that, I started this business, in Contra Costa County, walking groups of dogs off leash in the areas around here, and kind of grew steadily for nine years. And then a year ago, I decided to open up a storefront in Martinez and diversify to pet food and supplies, as well as dog training and dog grooming. Which is kind of what Travis helped me do with a big loan. So yeah,

Sarah Cooke 03:45

so you sound like my younger child, loves animals, could not do the harder aspects of the veterinarian type job for sure. And everybody loves their dogs, so and puts a lot of time and care money into them. So I've got one at my feet right now. So how did you come to learn about Travis Credit Union? So

Matt Heikkila 04:05

when I when I moved back to the area, I needed to have a local bank and my dad was always big into credit unions because of the lack of fees and sort of the local aspects to them. And so I did some research and walked into Travis Credit Union and, you know, opened up a personal account. Later on, I opened up a business account, and I've just sort of done a lot of my banking, you know, personal and business ever since then. Awesome.

Sarah Cooke 04:31

A convert to credit unions. Yeah. So yes, Shane, similar to you. I've been in credit unions, almost 25 years now. And so they kind of suck it in once they get ahold of you. So how long has Travis Credit Union been into business lending and how important is that to the success of Travis here? I'm asking the VP of Business Lending.

Shane Knighton 04:56

I personally think it's very important Sarah. So, Travis has been in business lending for coming up on 20 years, actually. And obviously, I wasn't here for that. But you know, it's about the same time a lot of credit unions just started getting into that. You know, and I would say in terms of the importance of its success to our credit union, look, small businesses are the backbone of our economy and our communities. So if you think about it here in California, there are about 4 million small businesses that employ nearly half of our workforce. And in fact, for the last 30 years or so small businesses have generated about two thirds of net new jobs. So with Community Focus, being one of our core values, and uplifting small businesses within our communities is very much part of our DNA. Yeah,

Sarah Cooke 05:43

and so like, when you're making loans, like what types of loans are you generally talking about? For Business Loans? Are we talking million dollar condo buildings? Are we talking you know, lawn mower loans to a landscaper kind of thing?

Shane Knighton 05:59

My short answer is yes. So I kind of just give you an industry overview real quick. And I think it'll contextualize this. Credit unions, by and large, we've been primarily focused on commercial real estate. So that's about 90% of the total portfolio. But when you sort of look at what's happened since the pandemic and Paycheck Protection Program, you've seen a lot of credit unions start shifting into that small business segment. Travis, we've been an SBA preferred lender for years. So we do SBA loans, equipment, loans, everything from you know, that $50,000 working capital loan, up to that $10, $20 million commercial real estate loan.

Sarah Cooke 06:38

And so what did you think? Alright, because we weren't there, when that came in for the loan, but let's say you were, somebody comes in and says they want a business loan for for a dog walking business and, you know, dog care business. How do you approach that as a, you know, from a risk perspective, all the all the different things that credit unions have to think about?

Shane Knighton 07:01

Well, I think, you know, as I mentioned earlier, each business is different. And I just, you know, you have to dig into the story. I think Matt's businesses is very representative of what many of the small businesses within our communities look like. Not only do they provide services that are in high demand, but they also contribute to the economic vitality of our communities. So, you know, in the 20, plus years, I've been working with small businesses, I've developed a deep appreciation for entrepreneurs who had the courage to go out and, you know, pursue their passion and their dreams. And, you know, in terms of working with borrowers, I just, I love being able to work with people who have that entrepreneurial spirit, that passionate creativity, and you know, partnering with Matt's business, to me was an opportunity for the credit union to not only help him but you know, uplift our communities as well. And so I just find the work overall, very fulfilling.

Sarah Cooke 07:52

Yeah. And as a small business owner, it's so difficult to get credit, especially in those very early days. So, Matt, how has it been working with Travis Credit Union? And what do you think has been the credit union's contribution to Diablo Dog's success?

Matt Heikkila 08:09

It's been great. You know, I've I've worked with Travis for personal and business banking for I believe, you know, like, something like 13 years, I've gotten personal and business loans, car loans, and even the PPP loan through Travis. And the loan I got through Travis last year was vital to starting up this storefront, the way that I wanted to. There's no way, you know, there's no way this space would look this nice. There's no way we can kind of provide all the different aspects of the business that we would have wanted to without getting that loan. So yeah, it's been huge.

Sarah Cooke 08:50
No, so talk about you'd mentioned a little bit, but talk a little bit about how much how you've

expanded the business, from dog walking to what you're doing now.

Matt Heikkila 08:58

Yeah, so you know, when I first started the business, I had a little bit of experience with with kind of doing the off leash dog walking thing, and we were kind of, there was some competition, but not a whole lot in this area. And so we're able to kind of grow steadily over the years. And, you know, I'm also have the animal training background, and so eventually, I wanted to sort of add that but, you know, if you're going to be training dogs, you need to have a place you could do it out of the elements. And so you need a storefront, or, you know, a space. And then you know, we also kind of saw a need for grooming as well because, you know, the dogs are out there getting dirty and it'd be nice to also offer that to our customers. And then the pet food and supplies was actually a happy accident because of where we were going to rent. The zoning said that we need to sell things and so we decided, well, let's sell everything you know, sell a variety and kind of make is a real pet store. And so obviously, the costs sort of, you know, got really big, you know, we had to make changes to the space in order to accommodate grooming especially. And then just to make this place look nice. And so, you know, Travis's loan was, you know, yeah, there's no way I could have done it without Travis's loan.

Sarah Cooke 10:20

Yeah, there's a lot of things people don't think about, like inventory and equipment and stuff that, that all adds up, even if some of them I mean, not to mention the space, I can't imagine what it costs there, California. So, Matt, one of the things that credit unions have had issues with is getting people to understand them and who they are and what they do. Getting their attention. So what, what's the best way would you suggest for credit unions to get attention of the general consumers?

Matt Heikkila 10:52

Um, I would say, you know, just kind of offering, combining sort of the strengths of the credit union, which is the sort of more personal, more community based aspects with the sort of ease of using the bigger banks. I think, once you know, once they sort of get the message out there that, that you can kind of do a lot of the things through a credit union that you can through a big bank, but you don't have to feel like you're, you know, talking to a robot all the time. I think that, that helps quite a bit. Yeah, I would say kind of that.

Sarah Cooke 11:29

Great. Yeah. So Shane, are you hearing some of the same sentiments in the community of small businesses that you are serving? As far as you know, how helpful the credit union is, how it supports the community, you know, supports the small businesses? What are you hearing in the community about your business banking?

Shane Knighton 11:49

Why, I do you hear that quite a lot. Look, small businesses aren't looking just to transact with their financial institution, as Matt said, you know, they're really looking for a relationship with their banker, who understands their business and can provide guidance and advice at times, you know, so I think with big banks, there's tends to be that focus on the larger transactions, or the larger businesses. In fact, I often see ads from larger banks claiming to support small businesses, but you know, many of those banks are just really focused on those, on those transactions that are over $250,000. So I think, you know, when it comes to what credit unions can do, you know, we're, we tend to be more community based. And I think, you know, when you look at what the needs of small businesses are, two thirds of small businesses who need to borrow money need less than $250,000. And so you know, when you think about the economies of scale, that are involved in that, you know, you can't afford to underwrite those things like you would a $10 million commercial real estate loan. So you've got to be a little more nimble and able to adapt your process face to the needs of your market. Yeah,

Sarah Cooke 12:51

absolutely. And Shane, a lot of credit unions aren't involved in business lending. It's either too risky, or it's too expensive to get the expertise. What are the rewards? Everybody talks about that. What are the rewards to the credit union? Obviously, there's, you know, supporting the community, getting the brand out, the financial rewards, obviously, you know, lots of different things. But what are you seeing at Travis as the rewards of offering small business lending?

Shane Knighton 13:22

Well, I think serving small business is at the heart of our mission. So you know, we're here to address the needs of our communities and to serve the underserved. And, you know, I think, Matt, you would agree that, you know, a lot of banks turn away small businesses, and, you know, therefore, they're underserved. So I think uplifting small businesses in our communities, we're sustaining job creation, and overall economic activity, and that ultimately benefits all of our members. And so, you know, I look at the benefits of the credit union, and frankly, the success and, you know, the success of our members really is reflected within our own success.

Sarah Cooke 13:59

And so I always allow my guests to have the final say, the final thoughts, my husband would be shocked that I allow you the final word. I'll start with you, Matt. What are your final thoughts about working with credit unions as a small business, small business borrower?

Matt Heikkila 14:18

Yeah. You know, I look forward to working with Travis in the future. I have plans to kind of further grow my business into sort of obvious spaces like doggy daycare, you know, overnight kennel sort of things. And those are, obviously, you know, those can be some big sort of things to pursue, and so I will need loans for that. But yeah, so I'll probably be renting or purchasing land or, or more office space, and adding those. So yeah, I look forward to working with Travis in the future.

Sarah Cooke 14:54
Awesome. Awesome. And Shane, final thoughts from you?

Shane Knighton 14:59
Well, I think it's really an exciting time for small businesses and credit unions. You know, advancements in technology, especially since paycheck protection, you know, a few years ago, have really helped service an acceleration to the technology. And so when I talk about the, you know, economies of scale, and the ability to really address the needs of small businesses, I think we were, you know, fighting for a long time, some restraints of our technology. So with paycheck protection loan program, I think you saw a lot of technology companies kind of change their mindset, we got to sort of throw off the 1980s style version of analyzing credits, and now we're, we're able to employ more and more technology to make it an expedited, and also an intuitive and easy to use platform. So I think you're going to see more and more credit unions serving the small business space. They're going to be doing it more cost effectively. And I think you know, what, once took weeks to approve a loan, we're now down to days and soon, hours and minutes. So I think ultimately, these developments will help credit unions further fulfill their missions and help serve these underserved businesses within our communities. Absolutely. That's

Sarah Cooke 16:13
great to hear Shane, especially the technology piece. Well, thank you, Matt, and Shane, for joining us today. Appreciate your time.

Shane Knighton 16:20

Thank you so much.