No matter what type of business you run, it’s always a good idea to separate your personal finances from your business finances. However, you don’t necessarily need to go to a traditional bank to do this. Credit unions are an excellent alternative for small business banking.
Credit unions are not-for-profit financial institutions. And since they don’t need to focus on turning a profit, they’re often able to offer better banking tools, loan rates, and, in my experience, customer service. If you’ve ever felt like your needs weren’t being prioritized by your bank, then a credit union might be the perfect choice for you.
But what exactly are credit unions? What are the best credit unions for small businesses?
Don’t worry, we’ve got you covered. Let’s take a closer look at what credit unions are and what the best credit unions for small businesses are.
What Are Credit Unions?
Credit unions are cooperative (member-owned), not-for-profit organizations. Whereas traditional banks aim to make a profit, any money credit unions make is put back into the organization to improve its services.
All members of a credit union are considered part-owners and can vote on the credit union’s board of volunteers.
One of the biggest advantages of credit unions for small businesses is that they often offer small business loans with much more favorable rates than banks. Since credit unions are not-for-profit organizations, there’s no reason for them to charge unreasonably high-interest rates.
While credit unions often offer more attractive financial tools and perks than banks, they are often more difficult to join. Every credit union has its own eligibility requirements. Some may require you to work in a specific industry, while others require you to live within a particular area.
Banks vs. Credit unions
Credit unions offer many of the same financial tools as banks—checking accounts, savings accounts, loans, credit cards, etc. However, while they do offer many of the same benefits, keep in mind that credit unions are not banks.
Banks are for-profit institutions. As such, they often have higher interest rates on loans, lower APYs on savings accounts, charge higher fees, and more.
What is APY?
APY stands for Annual Percentage Yield, and it’s the yearly interest rate in a bank account (how much money you earn as a percentage of your current savings).
On the other hand, banks offer some benefits that can’t be matched by credit unions. For example, major banks have branches and ATMs in nearly every city across the country. Meanwhile, depending on where you live, it can be challenging to find a credit union branch when you urgently need assistance.
Large banks are also often better equipped to serve small businesses. They usually offer a wider range of banking tools and services that make the lives of small business managers much easier, such as better online banking tools.
All things considered, credit unions are an excellent option for small businesses as long as you understand what you may be missing out on.
5 Best Credit Unions for Small Businesses
If you’re interested in becoming a member at a credit union, it’s crucial to find one that serves small businesses and can meet your needs.
To help make your search a little bit easier, here are five of the best credit unions for small businesses.
First Tech Federal Credit Union is a California-based credit union with excellent online banking tools—making it easy to monitor and manage your business’ finances.
First Tech offers three business checking accounts: Carefree Checking, HSA Checking and Dividend Rewards Checking, the latter of which offers up to 1.50% APY. There are also three business savings accounts, which offer APYs ranging from 0.05% to 0.20%.
To become a member, you need to:
- Work for an innovative company on their partner list or for the State of Oregon.
- Work or live in Lane County, Oregon.
- Belong to the Computer History Museum or Financial Fitness Association.
- If you don’t meet any of the criteria, the institution encourages you to give them a call or stop by a branch to help you navigate.
America First Credit Union might be the most business-friendly credit union in the nation thanks mostly to its small business loans.
Small business owners can apply for SBA secured and unsecured lines of credit, SBA auto loans, commercial real estate loans, equipment loans, and more. America First also offers a designated business credit card with customizable rewards.
Additionally, America First is part of the Co-op ATM network—giving customers access to thousands of ATMs across the country.
Also notable, America First offers different savings options, including certificates of deposit. The APYs for the various accounts depend on a variety of factors, including account balance, term length, and more.
Eligibility is dependent on where you live and work. Visit this page for more information.
Navy Federal Credit Union (NFCU) offers several great services and perks for individuals and small businesses.
NFCU offers five savings options with up to 0.90% APY, loans, business lines of credit, online and mobile banking, and business credit cards with flexible rewards.
As you might’ve guessed by the name, you must be an active service member, veteran, family of a service member, or a civilian working for the Department of Defense to qualify for membership at NFCU.
Illinois-based Consumers Credit Union is one of the best credit unions and one of the easiest to be eligible for. All you need to do is pay a one-time $5 fee to join the Consumers Cooperative Association and become eligible to join this credit union.
Consumers Credit Union offers a business checking with four tiers. APYs on these accounts range from 0.05% to 0.25%. There is only one savings option for small businesses, though, which offers 0.10% APY with a $50 minimum account balance.
This credit union also offers money market and CD accounts, as well as SBA loans, commercial real estate loans, equipment loans, business lines of credit, and more.
Thanks to the lenient eligibility requirements and variety of business-focused services, Consumers Credit Union is one of the best credit unions for small businesses.
Alliant Credit Union, based in Chicago, is one of the most reputable and small business-friendly credit unions in the country.
Alliant, unfortunately, does not offer bank accounts designed for small businesses. However, Alliant’s personal bank accounts provide full-featured mobile and online banking options. As such, these personal accounts can work for small businesses as long as you avoid commingling your business and personal finances.
Alliant’s high-interest checking offers a competitive 0.25% APY, while the high-interest savings account offers up to 0.75% APY.
Alliant also offers personal loans with generous rates and commercial real estate lending.
There are only two physical Alliant branches, but this credit union does have a vast network of ATMs all over the country.
To become a member, this are the requirements:
- Employees & Retirees of select organizations.
- Relatives of existing Alliant members.
- Live or work in a qualifying community.
- If you are not eligible, you can support their partner charity.
Is a Credit Union What you Were Looking for?
Credit unions are a fantastic alternative to banks for many small businesses. While you may have to make some sacrifices with regards to ATMs, physical locations, and services, the best credit unions for small businesses often offer much better loan rates, APYs, and customer service.
If your business needs additional financial assistance, consider applying for a small business loan. At Camino Financial, we operate on the motto, “No Business Left Behind,” which is why we offer small business loans with competitive rates, great terms, and low fees.
Start your application process today and see instantly if you pre-qualify!