Banking can sometimes bring challenges for small business owners, who struggle to get the financing they need from big institutions. In fact, the smaller the business, the higher the likelihood of frustration when dealing with a big bank.
Instead, small business owners may find they’re better off choosing a credit union as their financial partner. The decision often means better access to loans at lower interest rates, reduced fees, and higher rates of return on savings and investments.
Credit Unions have more personalized customer service
As we explained in an earlier post breaking down the differences between credit unions and banks, customer service is one place credit unions consistently out-perform big banks on satisfaction surveys. It goes back to the member-focused approach of credit unions, where every account holder is a part-owner of the cooperative, versus the for-profit model of banks.
At a credit union, you’re likely to find a stronger connection and more personal fit, one tailored to meet your specific financial needs. You’ll also find supportive, encouraging partners who view the success of your small business as success for the credit union, too.
Credit Unions have a similar range of products and services to big banks
Truth be told, you can’t get everything from a credit union that you can at a big bank. For instance, if your small business needs access to foreign exchange services, you may need the broader range of offerings available from larger financial institutions, or access to their wider network of branches and ATMs.
If all your small business needs are access to loans, savings and chequing accounts, credit cards, investment products, and so on, you’ll find everything you need at a local credit union.
Credit Unions members have easier, faster access to loans
When you’re an owner-member of a credit union, you’re more than just another customer. As a result, it’s often easier to negotiate a loan, with funds made available more quickly, too. That’s a massive benefit for small business owners, whose may have flexible and fast-changing financing needs that aren’t always easy to achieve at bigger financial institutions.
Pay less to borrow, earn more on savings
By choosing a credit union, members pay lower interest on loans and earn higher interest on savings than they would at most banks. Reducing the cost of borrowing is a big plus for small business owners, who don’t want to pay more than necessary to get money for any number of important reasons, such as infrastructure investment or equipment purchases.
Higher interest rates on savings accounts (and dividends paid from credit union profits), help members grow their money faster and build more wealth. Small business owners can use additional funds for training, new hires, or other ways to help improve the company.
Credit Unions have lower fees
Fees are a way for banks to increase profits, so they’ll find ways to make you pay for the services you need, eating into your overall earnings bite by bite. At member-focused credit unions, many services are offered free of charge, or at a fraction of the cost you’d pay at a big bank. Add it up over time, and you might be surprised by how quickly cheaper transaction fees and completely free chequing could save your small business a bundle.
You get a say
Credit unions are run by a board of directors, and those who sit on the board are elected by their fellow members. Regardless of the amount they have deposited, every account holder gets a say in the overall direction of the credit union, whether it’s by casting a ballot for board members, or volunteering for the board themselves.