For many business owners, finding a financial institution that meets their specific — and often unique — needs can be difficult. However, credit unions, which offer many benefits that can help business owners achieve their economic goals, are frequently overlooked as a potential option for business accounts.

This post discusses the differences and advantages of using a credit union for business accounts. Additionally, we'll provide guidance on how to select the right credit union for your business.

Credit Unions vs. Banks

Credit unions and banks both cater to businesses with a bevy of services and products for businesses. However, these two kinds of financial institutions do not have the same structures or approaches.

Understanding what each brings to the conference room table is critical. It'll help you decide what's best — banks or credit unions — for business accounts like yours.

6 Key Differences between Credit Unions & Banks

When evaluating banks versus credit unions for your business, it's important to understand how they differ.

1. Ownership and allegiance. Credit unions are not-for-profit organizations owned by their members, while banks are owned by shareholders.
2. Profit distribution. Banks use profits to enrich their shareholders, while credit unions use profits to benefit their members in the form of lower fees, higher interest rates on savings accounts, and lower interest rates on loans.
3. Governance. Banks and credit unions are both subject to state and federal regulations. However, oversight and insurance for banks is through the Federal Deposit Insurance Corp. (FDIC) while for credit unions it’s through the National Credit Union Administration (NCUA).
4. Size. Some banks, which tend to be larger than credit unions, may be better equipped to provide a broader range of offerings. (However, credit unions are birds of a feather that flock together — many have formed vast networks that span the nation! This means that many credit unions, like VCU, offer just as many products as banks.)
5. Focus. Credit unions tend to be more consumer-focused than banks.
6. Approach. While both may have similar products, they may specialize in different things. For example, a credit union may do more auto lending whereas a bank may favor larger loans and business relationships.

Advantages of Credit Unions for Businesses

Credit unions may be small, but they can be mighty! There are plenty of reasons why businesses take their business to credit unions — like these benefits:

• Lower fees. Credit unions generally have lower fees — or no fees or waived fees — associated with their accounts, which can help businesses save money. 
• More personalized service. Credit unions are known for treating customers to a higher standard of service. This can help businesses get the banking services they need quickly and easily (and without adding extra headaches).
• Higher interest rates on savings accounts. Credit unions typically offer better interest rates on savings accounts than banks, which can help businesses build up their savings more rapidly.
• Lower loan interest rates. Credit unions have a reputation for lower loan interest rates than banks. This is just another way businesses might save money on loans.
• Increased flexibility for borrowers. Credit unions are often more lenient and favorable terms for loans, which can be beneficial for businesses with particular needs.
• Easy access. Sometimes, businesses find that it’s easier to work with credit unions. This could be because credit unions may throw up fewer barriers to gaining access to products and services.
• Dividends. Instead of earnings going to shareholders, credit unions often share the wealth with account holders.
• Unique perks. Many credit unions have special bonus incentives for members — like discounts, deals, and promotions on products and services from other businesses. And, community credit unions are apt to support other local businesses.
• Community involvement. Credit unions are usually more actively involved in their towns and neighborhoods, which can help businesses build relationships with other local businesses and organizations.
• Trust and security. Lots of credit unions enjoy a high satisfaction rate among members, with members citing trustworthiness and sense of security as driving factors for their happiness.

Ready to join a credit union yet?

Credit Unions Are Working for Businesses Like Yours

So, it’s come down to the wire — it’s decision time. A credit union sounds like the way to go for your business.

You’re contemplating the handful of credit unions that have made it onto your shortlist. What things should you be looking for as you weigh your options?

Our recommendation is to approach your assessment thoroughly and holistically. When trying to determine which financial institution is suited to your business, here are some questions to ponder.

Factors to Consider When Considering a Credit Union

• Offerings available. Are you able to get all the products and services you need?
• Security. Is the institution federally insured? Does it have a good track record when it comes to compliance and fiduciary obligations? Is the bank or credit union in good standing in its community? Do they take the necessary steps to ensure your private information, accounts, and transactions are safe?
• Convenience and practicality. Will you be able to access and manage your money with ease and flexibility? Are the tools and systems in place to enable you to take care of your banking needs where and when you need to? Are there ATMs, branches, and digital pathways to your accounts?
• The bottom line. Given the products and services available — and their interest rates, fees, charges, etc. — which option will help you save money and make money? Net-net, which is more bang for the buck?
• Human elements. Think about the kind of interactions you'd like to have when engaging with the financial institution. Is stellar customer service and support meaningful to you? Do you expect to conduct your banking via real-life encounters or only virtually, and how's this impact this qualitative aspect of your banking experience? Are they responsive, professional, helpful?
• Miscellaneous and extras. What kind of perks or distinct benefits do they offer and are they of value to your business? Are they willing and able to provide financial advice and counseling services? What sets them apart — in a good way — from the competition? Do they align with your business mission or values — are they a good fit?

Valley Credit Union Can Help Your Business Grow!

Your business matters. And your business's money matters matter, too.

That's why VCU is so committed to providing you with exceptional member care, comprehensive financial services, competitive rates, and a ton of great tools and resources. We're dedicated to helping your businesses grow, prosper, and succeed.

For business financial offerings you can bank on, contact Valley Credit Union today!

About the Author

 Pat Force, President and CEO

Pat Force has been President and CEO of Valley Credit Union since 2016. He has worked in banking for over 30 years and has an MBA. Pat is passionate about credit unions and their “people helping people” philosophy. He enjoys collaborating with others to arrive at a result that works for the common good. Away from the office, Pat likes to spend time with family, travel, read and go for a nice, long hike.