Credit unions are not-for-profit, community-based, member-owned financial institutions that are uniquely positioned to help America’s more than 27 million small businesses. They return yearly profits to their members in the form of lower interest rates on loans, lower fees on accounts, and better interest on savings accounts—including business accounts and loans. They also offer smaller business loan amounts, which can be a huge advantage for entrepreneurs who are just starting out.
Beyond these dollars and cents advantages, credit unions are operated on the principle of “people helping people.” What this means for small businesses is a more personal, local approach to loan approval—often a big hurdle for the new small business. The approval process is more likely to include the credit union’s own interactions with the applicant than a big bank’s universal application process.
A credit union is also more likely to understand a communities’ need for and potential success of a small business, as they themselves have deep roots in the community. Credit unions are all about keeping local dollars in the local economy. This was never more evident than during and immediately after the Great Recession.
While banks slowed or halted their portfolio growth of small business loans during the Great Recession, credit unions were continually expanding theirs. They stepped in to offer support and services when banks would not. According to the U.S. Small Business Administration (SBA), from 2007–2015 outstanding small business loans at credit unions more than doubled, while similar bank loans shrank by 10%.
Access to capital, financial counselling and planning services, and lower-fee accounts is vital to millions of small businesses across the U.S. Credit unions understand this and are uniquely positioned to deliver the tailored finance solutions small businesses need.