Businesses can fulfill their business needs by joining a credit union or commercial bank. Both these financial institutions offer savings accounts, loans, checking accounts, business accounts, and a couple of other significant services. They also get protection from the federal government. However, credit unions can make a better choice, especially for small businesses. There are plenty of reasons behind this. Before going into that, it’s essential to understand that credit unions are non-profit organizations which run on membership, unlike banks that have stockholders.
When you join its membership, you can easily open your choice of account with them and become eligible for lending options and credit cards. A large number of them also provide investment services and share their profits with the members by charging lower interest rates on loans and offering higher savings rates. Their customer-centric policies make them more committed to their members compared to banks who generally prioritize the needs of their stockholders and owners.
From this, it is comfortable to anticipate that credit unions can be a boon for small businesses. And this can prove right to a great extent because of their attributes that render them a status of the most suitable primary financial institution. Here you will learn about them.
Benefits of using credit unions for small businesses
Business owners may want to join these non-profit organizations for a variety of reasons, including their customer service, online banking, easy accessibility, deposit and loan rates, and products and services.
Complete business banking services
It is a common belief that credit unions cannot offer as many services and products as banks, while the reality is something else. These financial establishments offer a full suite of business facilities that consist of lending, investment, credit card, and checking. You can choose product options as per your needs so that you can benefit, whether it’s your new business, budding enterprise, or a well-established small company.
Membership rewards
Banks have shareholders, and they have to share their profits with them in the form of dividends. However, in credit unions, every customer is a member as membership is a must. These institutions return their profits to each member by providing them with the best rates.
That’s why small businesses can expect to earn higher rates on their money market, checking, and other accounts. Also, since these types of banking institutions offer loan at significantly lower interest rates compared to anywhere else, you can save a substantial amount of money during the loan term.
Local support
Small businesses benefit their communities; similarly, credit unions also work towards the betterment of the communities by offering sponsorships, donations, scholarships, small business loans, etc.
Another benefit of working with these local financial institutions is the lower risk of loan denial because decisions are taken locally. The application doesn’t need to travel across the country for approval or rejection.
Accessibility
People choose banks for the convenience of online banking services and advanced technology. They hesitate to join credit unions because of the belief that these institutions cannot provide that ease of online operation. However, in truth, even credit unions also offer a gamut of online and mobile banking facilities, including fund transfer, bill payments, deposits, account activity, and others.
Lower fees
Fees structure can be one of the major attractions for business account holders. Generally, banks levy charges per-item basis. For example, they can process 99 checks for free, but if the 100th item is something else, a charge may apply. Remember that the permissible number of free transactions can vary based on the type of account you hold. Credit unions can allow you to do different kinds of transactions without charging a fee for each item until the transaction limit for your account type gets exhausted. For business owners, this kind of saving can also be meaningful.
Points to remember when using a credit union
Credit unions can be local, but being a part of the global network, they can offer you money withdrawal and other services wherever you go. So, there is nothing to fear. If you want to benefit your business, you can also consider becoming a part of this financial institution. However, there are a few considerations that you have to keep in mind while using their services.
Size of the credit union
One of the crucial things to keep in mind is that a credit union is different from a commercial bank despite being able to offer many services for individuals and businesses. Since these are smaller agencies, you cannot expect them to give you big loans. That could not be a problem if you are a small business. However, it can become a sore point if you would need huge funds for your business. So, before you become a member, make sure to find out that it can fulfill your business needs.
Business accounts
These are typically local or regional bodies. So, you can visit one in your area to learn about their personal and business services. Although the majority of them offer business accounts, it is still better to inquire about it. Also, don’t forget to ask them about the availability of any particular business service that you may need, for instance – merchant processing. The credit union should also be able to assist you in setting up your business account.
Membership
Private and public banks have customers, while credit unions members. You will need to become a member of a selected credit union before being eligible to use its services. So sign up for the membership, which can be free or apply a nominal charge. After that, you can apply for business loans, credit cards, certificate of deposits, checking account, etc.
There can be many credit unions in your area. However, you should opt for one that can meet your business needs and has federal insurance to protect the interests of its members. If you want, you can try Navy Federal also. However, before taking any decision, make sure to check the Navy Federal Credit Union review. It will give you proper insight into the quality of their services and products along with eligibility criteria.
I like the idea of getting to choose a product option according to my needs. Rather than having to choose a pre-determined plan. This would make any business loan more efficient.