You undoubtedly know what a bank is, but some people are unfamiliar with credit unions. A credit union is a non-profit entity that functions as a financial cooperative. You can expect many of the same services there that you’ll get at a traditional bank, such as allowing you to make deposits.
If you need a loan for your small business, though, you may wonder whether you should approach a credit union rather than a traditional bank. Credit unions with small business loans may be preferable, and we’ll explain why right now.
The Personal Touch
If you go to a branch of a large national bank, you can certainly apply for a small business loan. You may get a comparable interest rate to what you would get at a credit union, assuming you have a viable business plan that you can show the lending agent when you meet with them.
You may find the service you get at a national bank branch to be a bit stiff or impersonal. You will likely get more of a personal touch with a credit union.
Credit unions ostensibly exist to help smaller business entities. They serve a local community rather than a national or international one. If you approach a lending agent at a credit union, they may know more about your town or city.
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They may be uniquely situated to understand what an impact your small business can have if they allow you to open it. Consequently, they may be more receptive to giving you the loan.
Credit Unions Want To Help Businesses That Impact The Local Community
Credit unions don’t just see you as a faceless customer in the way that the local branch of a national or international bank might. Instead, the lending agent will genuinely consider what your small business can do for the community if they grant you the money.
They will probably know the neighborhood where you propose to open your business, and they can imagine how much benefit consumers can get from it. This puts you in a favorable position to get that loan.
You May See A Credit Union As Being More Trustworthy
One final reason why credit unions might be a better bet than national or international bank branches if you want a small business loan is that you’ll probably see a credit union as being more trustworthy. There’s a simple reason for that: credit unions, unlike banks, are not-for-profit entities.
Banks want to make money off of you, which is why you can often get a more favorable interest rate if you take out a small business loan with a credit union instead. Also, you might feel wary about some larger banks because of failures that periodically take place, like what just happened with Silicon Valley Bank.
Credit unions are less likely to use aggressive tactics like Silicon Valley did to try and generate additional revenue. These reasons might be sufficient for approaching a credit union for your business loan rather than a bank.