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unveiling the 7 benefits of credit unions and business loans-new blog of small business coach associates

Unveiling the 7 Benefits of Credit Unions and Business Loans

You may already know that credit unions are an excellent option for personal banking. But did you know they also offer amazing benefits for businesses seeking loans? Credit unions provide a more personalized approach compared to large national banks. They aim to understand the unique needs of your business. In this post, we’ll highlight seven key advantages that credit unions offer for business loans. We’ll also answer some frequently asked questions.

Our aim is to assist you in making the best financing choice for the growth and success of your company. Let’s dive in!

 1. Lower Interest Rates

When researching the many Boise credit union options for business lending, it became clear that credit unions offer significant advantages, starting with lower interest rates.

On average, rates are 1-3% lower compared to those offered by large national banks. This saves you significant money over the life of the loan.

For example, if you get a $100,000 loan over 5 years, here is the difference in total interest paid:

  • Big Bank Rate: 7% – Total Interest Paid: $35,000
  • Credit Union Rate: 4% – Total Interest Paid: $20,000

That’s a $15,000 savings just by choosing a credit union!

 2. Higher Approval Odds

choosing business loans

Small businesses have a 90% approval rate when applying for loans at credit unions. This is much higher than in large national banks, where just 30% of applications get approved.

Credit unions look beyond credit scores and financials. They take time to understand your business goals and plans. This personalized approach leads to more loans being approved.

 3. Flexible Loan Options

Credit unions offer various business loan types including:

  • Term Loans – Fixed regular payments over 1-25 years
  • Lines of Credit – Access cash as needed up to a set limit
  • Commercial Mortgages – Long-term financing for commercial property  

They work with you to find the right loan type and terms for your needs. This flexibility is a major plus for businesses.

 4. Business Services Beyond Loans 

In addition to loans, credit unions provide other services like:

– Business checking accounts

– Merchant services to accept payments

– Financial planning assistance

Almost all credit unions (85%) offer business checking accounts. And 70% provide merchant services. By consolidating services, you simplify operations.

 5. Community Focus

Credit unions invest in the communities they serve. This means you can access local grants, sponsorships, and networking opportunities. 

You also get to bank with people you know and trust. The friendly faces at your local branch want you to thrive.  

 6. Ongoing Education 

Credit unions offer free financial seminars and resources. If you take advantage of these, you gain knowledge to grow your business. 

In fact, 78% of business owners who receive financial education from their credit union report improved financial health.

 7. Member-Owned Structure

Credit unions are non-profit cooperatives owned by members. They pass earnings back to members via better rates and fees.

You become a part-owner when you join. This gives you a voice in decision-making.

Now that you know the top perks, let’s look at business loans in more detail.

Benefit Credit Unions Large Banks
Interest Rates 1-3% lower on average Higher rates
Approval Odds 90% approval rate 30% approval rate
Loan Options Variety of loan types and terms Limited options
Member Ownership Member-owned co-op For-profit model

Types of Credit Union Business Loans

Credit unions provide various loan types to meet different needs:

Term Loans

– Fixed repayments over 1-25 years

– Ideal for large purchases like equipment or vehicles

Lines of Credit 

– Access cash up to your limit as needed

– Useful for managing cash flow gaps  

Commercial Mortgages

– Finance land, buildings, or construction  

– Lower monthly payments spread over longer periods

SBA Loans

– Loans backed by the Small Business Administration  

– Allows access to lower rates and higher limits

Your credit union will help identify the optimal type and terms for your business.

Getting Credit Union Business Loans

What can you expect when applying for a business loan from a credit union? Here is an overview of the key steps in the application and approval process:

Preparation

The first step is gathering required documents including financial statements, business plans, tax returns, and any other materials outlined by your credit union. Being organized and thorough in your preparation will get the process off to a good start.

Submission

Next, you will complete the business loan application and submit it along with supporting documents to the credit union for review. Be prepared to provide details about how the loan will be used, your ability to repay it, and growth plans.

Review

The credit union loan officer will conduct a comprehensive review of your application including assessing your financial position, business viability, creditworthiness, and ability to service the debt. This process typically takes 1-2 weeks.

Decision

After completing a rigorous review, the credit union will notify you of the loan decision. If approved, you will work with the loan officer to finalize precise loan terms that suit your business needs.

Funding

Finally, after accepting the loan terms, the funds will be disbursed into your business account. You can then put the financing to work growing your business.

The credit union’s vested interest in your success means they will provide guidance and support through each step. Their local and personalized approach aims to make the application process efficient and accessible for your business.

Addressing Myths of Credit Union Business Loans

using business loans

Now that you know the benefits, let’s clear up some common myths:

Myth: Credit unions have limited business loan options

Reality: They offer a variety of loan types including lines of credit, term loans, and commercial mortgages.

Myth: Credit unions lack the latest technology

Reality: Many now offer robust online banking, lending platforms, and merchant services.

Myth: It’s difficult to qualify for a credit union business loan 

Reality: Approval rates are high (90%) because credit unions take a personalized approach.

The truth is, credit unions provide great financing options tailored to your business!

Frequently Asked Questions

You probably have more questions about credit union business loans. Here are answers to some common FAQs:

1. Are credit union deposits insured?

Yes, deposits are insured up to $250,000 by the NCUA, similar to FDIC protection at banks. 

2. How do rates compare to online lenders?

Online lenders sometimes offer lower rates but fewer borrower protections. Credit unions offer slightly higher rates on average but more flexibility, personalized service, and control.

3. Can new businesses get approved? 

Yes. Credit unions look beyond credit history at the owner’s skills, plans, and projected cash flow. Strong applications can get approved.

Ready to Explore Credit Union Business Loans?

We hope this post provided useful insights into the many benefits credit unions offer for business lending. From lower rates to tailored loan options, they are a smart choice!

The next step is to contact your local Idaho credit union, such as those in the Boise or Nampa area, to discuss your business lending needs. Their business lending experts can explain options and submit your application. 

With personalized guidance and more approvals, credit unions are an excellent partner for unlocking your full business potential. The time to learn more is now!

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