Credit union business loans

Are these nonprofit lenders right for your small business?

Posted

Fact checked
Credit unions are nonprofit financial institutions owned by their members. With lower overhead costs than banks and other for-profit lenders, credit unions often offer some of the most affordable rates and terms out there. But there may be a low limit short loan term to how much you can borrow.

So if you’re looking to save, don’t need money right away or just need a small amount, a credit union could be a right fit.

Which credit unions offer business loans?

Below is a list of some of the major credit unions in Canada who offer loans to businesses.

  • Meridian
  • Vancity
  • Steinbach Credit Union (SCU)
  • Innovation Credit Union

How do credit union business loans differ from other business loans?

The main difference between credit union business loans and other types of business financing is the application process. Credit unions will likely require that all businesses to become members either before or during the application process, which typically involves opening a business checking or savings account.

Another factor that sets credit unions apart is the cost. Because they’re nonprofit lenders, credit unions can often offer more competitive rates and terms than you might find elsewhere.

But they’re not without some downsides. If you’re not already a member, you may have to pay membership fees to join a credit union in order to get a loan with it. And since they’re relatively small operations, credit unions usually don’t have the reserves to fund large projects.

Benefits of getting a business loan from a credit union

  • Highly competitive rates. Generally, credit unions charge less than traditional banks would charge for the same financial products.
  • Affordable small-dollar financing. Looking for a loan under $25,000 without astronomical rates? A credit union could be your best bet.
  • Membership perks. Many credit unions offer workshops and other free resources for members that could help you run your small business better.
  • Faster than a bank. While many credit unions probably can’t get your business next-day financing, they typically have a faster turnaround time than borrowing from a bank.

Drawbacks of a credit union business loan

  • Hard to qualify. Some credit unions only work with businesses that have been around for a couple of years and business owners with good to excellent credit.
  • Large amounts are hard to come by. Many credit unions just don’t have the resources to fund projects over $50,000.
  • Complicated applications. If you’re not already a member, your business typically has to fill out two applications to apply for financing: one for membership and one for the loan. And these can be highly detailed.

Compare a variety of business loans options

Credit unions aren’t your only finance options if you’re looking for a business loan. Besides banks, there are some organizations that primarily specialize in providing business loans. Check out the business loan providers in the list below to see more options.

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
5.49% - 22.79%
$1,000
$300,000
6 months - 5 years
$5,000 /month
450
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $5,000 in monthly deposits ($60,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
Lending Loop Business Loan
4.96% - 26.50%
$1,000
$500,000
3 months - 5 years
$100,000 /year
600
Lending Loop offers personalized loans up to $500,000 for small business owners who have been in business for at least one year and can show an annual revenue of at least $100,000.
loading

Compare up to 4 providers

The 7 steps to getting a business loan from a credit union

Ready to get financing through a credit union? Follow these steps to compare lenders and find a loan that fits your business’s needs.

  1. Know what you’re looking for. How much money does your business need to borrow? Do you want to back your loan with collateral? Knowing your priorities before you start your research can help you make a faster comparison.
  2. Do your research. Try to find a credit union that serves businesses in your area and matches your criteria. Look at features like the interest rate, term length, application fees and membership fees.
  3. Find out if you’re eligible. Once you’ve narrowed down your options, call customer service, stop by your local branch or submit a request for more information on the credit union’s website to find out if your business is eligible for membership and financing.
  4. Become a member. While many credit unions allow you to submit your membership and business loan application at the same time, some may ask you to become a member first.
  5. Gather your documents. Once you’ve settled on a credit union, having all of the required documents and information you need on hand can seriously speed up the application process.
  6. Complete and submit the application. How the application actually works varies between credit unions. Some have a quick online form, while others might ask you to set up an appointment to apply in person.
  7. Review and sign your offer. The turnaround time at credit unions is typically faster than a bank, but slower than an online lender. Once you get your offer, read it carefully to make sure it’s the right fit for your business before signing the loan documents.

Try our business loan calculator

How do become a credit union business member?

The process of becoming a business member differs between credit unions. Some may require business owners to become individual members first before they can open a business account. Others have separate, business-specific requirements that might be limited by location or industry.

Many credit unions don’t mention how business membership works on their websites, so you might need to email, call or visit your local branch to learn more. You can often apply to become a member along with your loan, though some credit unions require businesses to join first.

Bottom line

Credit union business loans are a good fit for established businesses looking for loans under $50,000 with competitive rates. However, they’re not ideal if you want to fund a large project.

To learn about your other business financing options, check out our comprehensive guide to business loans.

Frequently asked questions

Ask an Expert

You must be logged in to post a comment.

Go to site