You’re looking for new options for depository services for your small business and, of course, you want the best combination of products, services and rates. Typically, you’d go to a bank for those services. And while you’re familiar with credit unions and may even use one for your personal accounts, you’ve never considered one for your small business. But are there benefits to using a credit union rather than a bank for small businesses? Find out all of the details by reaching out to an insurance agent.
According to Patricia Briotta, Director of Public Relations for the National Association of Federal Credit Unions, one of the top benefits of using a credit union rather than a bank is customer service. “The American Customer Satisfaction Index (ACSI) released a report that showed that credit unions—with membership now surpassing 100 million—rank best among financial services providers and second-best among all 43 industries covered,” she says.
But what are some other reasons for considering a credit union for your small business? Here are just a few:
A credit union is a not-for-profit organization where the “members”—which is what accountholders at credit unions are called—are shareholders, not stockholders like at banks. Your deposits represent your member shares. Credit unions are financial cooperatives that are mostly made up of local members and governed by a volunteer board of directors. Unlike banks, credit unions have an election process where you vote for those directors, and the credit union reports to the board. These financial institutions are member-focused rather than profit-centered. Because members come first, decisions on product offerings, rates and fees are made with members in mind, not to maximize profits to stockholders. That means your small business and other local businesses (as well as citizens) control your local credit union.
Because service offerings are made with members in mind, maximizing shareholder profit at credit unions means passing on those profits in the form of free and low-cost services and higher returns. What does this mean for your business? In most cases, you pay less interest on credit cards and loans than at banks. Free checking really means “free” at many credit unions. Randy Carswell, Senior Vice President of Business Solutions at Randolph-Brooks Federal Credit Union, which serves South Central Texas, says, “Credit union business fees are typically lower, especially when it comes to transaction processing fees. As small business owners know, those fees can really add up.”
Moreover, adds Marc Wilensky, VP of Marketing at Mid-Atlantic Federal Credit Union in Germantown, MD, “Credit union savings, checking, CDs and money market accounts have higher returns than at banks.”
These savings and higher returns mean that, according to aSmarterChoice.org, a credit union search site, “During the twelve months ending September 2014, on average, each credit union member got a direct financial benefit of $74.”
Like banks, credit unions insure your business deposits up to $250,000. You can also buy insurance and get other financial services products that support your business objectives. This includes small business loans that are SBA-backed (and have the same terms and conditions as at banks). You have access to merchant accounts, payroll processing, online cash management and ACH services. You can find business tools, calculators and support as well as knowledgeable business member services representatives who can help you with your business needs. Credit unions are committed to helping your business grow and thrive. After all, the success of your business represents success for all the other member-shareholders of the credit union.
Because they are smaller, credit unions make decisions internally on lending and other services. So while underwriting requirements are consistent nationally, you still get faster turnaround for most services than at a bank. Also, says Wilensky, because his credit union, like many others, is part of a shared branch network program, “We are able to offer banking and deposit services through our partners as well. This is a great amenity that is not available to other financial institutions because they are not allowed to transact on behalf of other unaffiliated institutions.” Briotta adds, “Shared branching networks give members access to credit union locations in all 50 states.” In other words, no matter where you are, you can go into a shared branch with a different name and brand from you own credit union and transact business like you’re in your own.
With all that credit unions have to offer small businesses, it’s still important to find the right one. Unlike opening an account at a bank, you can’t join any credit union you want. Many require affiliation with a company, government agency or body or civic, religious or nonprofit organization. And not all offer business member services or all of the same ones, depending on their size and location. You can search for the right one for you by asking an insurance agent.
Briotta adds, “Credit unions pride themselves on offering all members exceptional service, attention and assistance. Essentially, the difference with small business members would be in the products and services used.”
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