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One of the most important decisions you’ll make as a small business owner is finding a hub for your business’s finances. Whether you need to open a bank account, apply for a small business loan, find a credit card, or simply consult a resource for your questions, you should feel confident that your financial institution can provide an answer for most (if not all) of your small business’s needs. And if you’re disenchanted by the prospect of patronizing a big bank, know that you have other options—instead, you can look into the best credit unions for small businesses.
Credit unions are a compelling alternative to banks for their personalized customer service and dedication to providing their members with the most affordable financial tools possible. And these days, it’s not so hard to find credit unions that offer financing tools specifically for their entrepreneurial members, including loans, credit cards, checking and savings accounts, insurance, retirement funds, and health savings accounts designed for small business owners.
Sound good to you? First, we’ll give you a refresher on why, exactly, you might want to choose a credit union over a bank (or vice versa) for your business’s finances. Then, we’ll tell you our picks for the best credit unions for small business particularly, so you’ll know exactly where to start your search.
If you’re looking for a credit union to call your business finances home, it’s likely that you already know the definition of a credit union, at least generally. But it’s easy to graft the characteristics of a bank onto a credit union, even though these two financial institutions are quite different.
Here’s a quick refresher on what credit unions are (and what they aren’t):
One of the biggest differentiators between credit unions and banks is that the former are not-for-profit, and the latter are definitively for profit.
Not-for-profit means exactly as the name suggests: These institutions don’t operate in order to make a profit for their owners. Rather, all the money they earn they put right back into their operations. Since credit unions are cooperative, what that not-for-profit structure means practically is that one member’s deposit might become another member’s loan. For many, this mutually supportive system is a major tipping point in credit unions’ favor.
That not-for-profit structure also spells good news for members seeking loans. Since credit unions don’t issue loans or other financial products in order to turn a profit as a bank or alternative lender would, their interest and savings rates are lower and fees fewer. If you can secure a credit union short-term loan, for instance, you’ll likely snag a loan with much lower rates than you would with an alternative lender, or perhaps even a bank. And although you’ll still need to meet stringent criteria to be eligible for a small business loan from your credit union, the approval process might be faster than it would be at a bank, since there’s generally less red tape involved in a credit union’s underwriting process.
Here’s another major distinction between banks and credit unions: Where banks are essentially profit-driven corporations, credit unions are entirely community-driven, right down to the way they operate. In a credit union, members are also part-owners, and they vote on a board of volunteers as managers. That greater participation and transparency may be another major selling point for you.
Because credit unions are inherently relationship-driven, they may provide even better and more personalized customer service than a large bank can, as well as educational services and other benefits for their members.
But don’t let that title scare you—you will need to meet certain requirements to be eligible to join a credit union, but they’re not all terribly exclusive. Depending on the credit union in question, you may be able (or unable) to join based on your:
Here’s where things get a little tricky: There’s a difference between federal credit unions and non-federal (aka state-chartered) credit unions, and that’s in how they’re insured and regulated. The vast majority of credit unions are federal, which means they’re regulated by the National Credit Union Administration (NCUA) and backed by the National Credit Union Share Insurance Fund (NCUSIF). As you can guess, non-federal credit unions are not regulated or insured by these government agencies; rather, they’re privately insured.
You’ll be able to tell whether a credit union is federally backed by the following characteristics:
The NCUA organizes credit unions into further subcategories even beyond these two distinctions, according to their membership types. Credit unions may be defined as community, educational, military, or service industry corporate credit unions, among others.
For all the positives of a credit union, you’ll need to be fully aware of its downsides, too—and why you may want to direct your search toward a traditional bank, instead.
Although credit unions generally offer a similar selection of financial tools as banks do, banks usually have more rewards programs, credit card options, and digital tools than credit unions do (such as online and mobile bill pay and expense tracking), as well as many more local branches and ATMs. Certain credit unions may not specifically offer business loans or bank accounts at all.
So, consider which financial tools you need, how heavily you prioritize online banking capabilities, accessibility to physical locations and ATMs, and a personal relationship with your financial institution as you peruse both credit unions and banks.
Also note that although credit union business loans generally carry low interest rates and fees, you might see similarly competitive rates in a loan from a small bank.
We chose the following credit unions as the best credit unions for small business for their impressive array of business-specific offerings, accessible membership criteria, and/or technological innovation.
This Utah-headquartered credit union stands out for their business loan program, which is just as extensive as you’d find at a traditional bank—entrepreneur members can apply for SBA secured or unsecured business lines of credit, both SBA and non-SBA business auto loans, equipment and machinery loans, unsecured capital loans, business acquisition loans, franchise loans, and commercial real estate loans.
Unlike many other credit unions, America First also offers a dedicated business credit card, whose cash back or rewards earnings you can customize according to your business’s needs. Business owners can also choose among three business checking account options, three business savings account options—including a health savings account for employers—and five business certificate account options. You can easily pay all your bills online, too.
America First’s membership eligibility is a bit more constrained than other credit unions, as it’s mostly limited to where you live or work. Also know that America First only operates in a handful of states, but its participation in co-operative banking means members do have access to 30,000+ ATMs.
Alliant only has two physical branch locations, but their participation in the CO-OP ATM network means that members have access to thousands of ATMs across the country.
Other than commercial real estate lending, this Chicago-based credit union doesn’t offer many business-specific financial products, but their 1.80% APY for a $100+ daily balance in their High-Rate Savings account is still a major draw. They also offer a free checking account, as well as a 0.65% APY on their High-Rate Checking option. As long as you’re diligently keeping your personal and business finances separate, you can certainly use these personal bank accounts for your business’s finances.
Gaining membership to Alliant is accessible, too; if you don’t meet their other membership qualifications, you can become eligible by making just a $5 donation to their partner charity, Foster Care to Success.
At 7 million members, Navy Federal Credit Union is the largest credit union in the nation. And on top of a wide array of financial tools for families and individuals, NFCU also offers a fairly comprehensive suite of business services, including low or no-fee checking accounts, savings accounts, credit cards, retirement and business insurance, merchant processing systems, business management tools, and six types of Navy Federal business loans.
To be eligible for membership, you’ll need to be an active service member, veteran, or family of an armed service member, but check their website for a full list of eligibility factors.
Look into First Tech Federal Credit Union if you plan to do much of your banking online, as they offer members one of the more comprehensive and user-friendly online and digital banking tools we’ve seen from a credit union. (That may not come as a surprise, considering that the California-based credit union was originally formed by Textronix employees.)
Through their online services, you can transfer money among and outside First Tech accounts, view your transaction history and balances, pay your bills, and make First Tech loan and credit card payments on your phone, tablet, or computer.
Although First Tech doesn’t offer as many business loan options as other credit unions on this list, they do have two business checking account options and three business savings account options, with as little as a $0 minimum balance requirement.
To become a member, you’ll need to work for a First Tech sponsor company, for Oregon state, or in Lane County, Oregon; live in Lane County; or be a member of the Computer History Museum or Financial Fitness Association. Immediate family members of First Tech members are also eligible to join.
Self-Help Credit Union earns a spot on this list for their stated mission of “creating and protecting ownership and economic opportunity for all,” which they do by working with traditionally underserved customers including people of color, women, rural residents, and low-income families, as well as offering accessible financial tools for nonprofits and small businesses.
Especially impressive is their small business loan program, which is among the more comprehensive we’ve seen from a credit union. In addition to term loans up to $250,000, Self-Help Credit Union offers commercial loans, SBA 504 loans, and New Markets Tax Credit Loans, which encourage investment in low-income communities. They can also furnish specialized loans, including financing for green businesses and recovery loans for businesses affected by Hurricane Matthew.
To become a member of this North Carolina-based credit union, you’ll need to live, work, worship, or attend school in an eligible county; meet certain family or employer criteria; or become a member of the Center for Community Self-Help, which requires a $5 fee.
To join Consumers Credit Union, which is based in Illinois, you just need to be a member of the Consumers Cooperative Association, which requires a one-time fee of $5, and open a share savings account with a $5 minimum deposit. All told, this is one of the easier credit unions to join, since you don’t need to live or work in a specific location to be eligible.
CCU members who are business owners can choose between the credit union’s two business checking accounts, both of which have no fee if you maintain a minimum monthly balance. Businesses that maintain higher balances can opt for their Corporate Checking account, which allows for greater transaction practices and also gains interest.
And if you’re seeking a business loan, there’s a good chance you’ll find one from CCU that suits your needs: Consumers Credit Union furnishes commercial mortgages, equipment financing, business lines of credit, and business construction and development loans.
What makes Digital Federal Credit Union unique—not only among the credit unions on this list, but among credit unions in general—is its equity crowdfunding feature, which gives members the opportunity to invest in businesses in the community. (Both aspiring investors and businesses looking to raise capital can use this service.)
That said, Massachusetts-based DFCU does offer business owners several, more traditional loan options, as well as business bank and credit card accounts. Especially noteworthy is their free business checking account, which requires no minimum balance and no maintenance fee.
Boeing employees started this eponymous credit union in 1935, but since then the Washington-based credit union has thankfully expanded its membership eligibility criteria—and established a stellar business banking program.
Included in their business offerings are two no-fee business checking accounts and several savings accounts (including a no-fee savings account, fixed-rate CDs, and retirement accounts). Boeing Employees Credit Union also offers two no-fee business credit cards, one of which earns you 1.5% cash back on purchases. And as a major plus, BEC is an SBA participating lender, which is somewhat rare for a credit union.
Ultimately, the best credit union for your small business will depend on which credit union is most accessible to you, both geographically and whether you can meet its qualifying criteria, so it’s best to structure your search around those two important factors.
And, just as you would when selecting a bank, you’ll need to think about what you need and expect from your banking institution—are you planning on applying for a business loan, or do you simply need a safe place to hold your cash? Do you plan to do much of your banking remotely, or would you prefer to forge a personal relationship with your local branch? The answers to all of these questions should lead you to your ideal credit union—or bank, if you think a larger institution would actually work better for you. The choice is yours.