Are Credit Unions a Good Place to Find a Business Loan?
If you have never considered joining a credit union or if you didn’t think you worked for the right company to do so, now might be the time to think again!
Credit unions are know for offering higher savings rates and lower loan rates. But one reason you may have written credit unions off in the past is that, historically, they are only open to individuals or family members that have an association either with a company, an organization, or a church. However, there are a few that the public can join, provided they join the credit union’s association and open up a savings account.
A major difference between traditional banks and credit unions is that members of credit unions are both members and owners. Another difference is that they democratically elect their board of directors based on a “one-person, one-vote” system. The number of votes is not based on how much money an individual has invested.
Three credit unions, in particular, that are open to the public AND offer lines of credit and loans for businesses are NASA Federal Credit Union, Lake Michigan Credit Union, and Consumer’s Credit Union. Begun in 1949, NASA Federal Credit Union now has a membership of over 100,000. In order to join NASA FCU, an individual must join the National Space Society and open a savings account with at least $5. A NASA FCU commercial revolving line of credit can be up to 500,000 and can finance up to 80% of collateral, including equipment and inventory.
Started in 1933, Lake Michigan FCU has approximately 305,000 members. Previously, in order to join LMCU, an individual had to live, work, or worship in one of the county’s of Michigan’s Lower Peninsula, now you can join by donating $5 to the ALS Association. LMCU offers several loan programs including operating lines of credit, commercial real estate loans including construction loans, and SBA loans.
Lastly Consumer’s Credit Union in Illinois is open to the public as well. In order to join the 61,000+ members, an individual must donate $5 to the Consumer’s Credit Association and maintain a savings account with at least $5. Consumer’s Credit Union offers a commercial mortgage with amortizations up to 30 years.
As stated earlier, credit unions generally offer lower loan rates to consumers. They also usually have lower fees, lower minimum deposits and lower interest on business credit cards. Some other great benefits of joining a public credit union include:
- Better Customer Service—Members own the credit unions, so therefore the quality of service and customer satisfaction is usually higher than that of traditional banking institutions.
- Free or Inexpensive Checking/Savings Accounts—Compared to banks, credit unions offer more free accounts.
- ATM Machines—Credit unions have partnered together to offer their customers more ATM locations, nearly 30,000.
Some things to think about when making a choice between a bank and a credit union include:
- Credit Card Rewards—Credit unions typically offer fewer benefits for business credit card reward programs. Some bank credit cards can offer up to 6% cash back, while credit union cards generally max out at 1.5%.
- New Technology—Banks have more resources to offer benefits like mobile banking.
As interest rates fluctuate with the market and with the loan recipient’s financial information, it is best to contact the credit union directly to learn more. As it stands, credit unions can serve as a great asset for small business growth and development.
Have more questions regarding credit union loan programs? Ask us in the comments.
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