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Compare credit union business loans
Are these nonprofit lenders right for your small business?
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.These are typically small operations with a limited capacity to serve and fund. Membership is often limited to a few states, and many don’t even serve businesses. Those that do often only offer financing up to $50,000 and require a lengthy application that you usually can’t fill out online.
But 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.
Provided your business has at least $10,000 in eligible assets, you may qualify for a business loan through Boeing Employees' Credit Union (BECU). It offers secured term loans up to $250,000 — large for a credit union — and has a few other business financing options if you can't provide security. But its application requires multiple documents and information about your business, which can make applying a tedious task.
Pros
Maximum loan amount of $100,000
Known for personalized service
Maximum APR of 18%
Cons
All owners with at least a 20% stake must join Navy FCU
Provided your business has at least $10,000 in eligible assets, you may qualify for a business loan through Boeing Employees' Credit Union (BECU). It offers secured term loans up to $250,000 — large for a credit union — and has a few other business financing options if you can't provide security. But its application requires multiple documents and information about your business, which can make applying a tedious task.
With loans starting as low as $500 and APRs ranging from 6.15% to 10.15%, Sound Credit Union offers one of the most competitive deals out there. And there are no fees — not even late fees. The downside: It's only available in Washington State. Businesses also must be at least two years old, and owners need a credit score of at least 700 to qualify.
Lake Michigan Credit Union might only have locations in Michigan and Florida, but its business loans are available nationwide. It offers secured term loans with rates that max out at 7% — several points below where APRs start at other credit unions. Business owners need to have good credit and enough collateral to back the amount you need to borrow.
Pros
Competitive APRs cap out at 7%
Available in all 50 states
No origination fee
Cons
Must secure the loan with collateral
No online application
Loans max out at $50,000
Loan amount
Up to $50,000
APR
5% to 7%
Min. Credit Score
700
Loan Term
Up to 240 months
Requirements
Personal credit score of 700+, established business, willing to become a member
Consumers Credit Union doesn't have a term loan option like the others credit unions on our list, but it does have an unsecured line of credit. Because it's revolving, you can pay back what you borrow and re-borrow the funds as you need them. But there's a $100 annual fee each year you have your line open — something you won't typically pay with a term loan.
Pros
Extremely low starting APR of 1.5%
Secured and unsecured lines available
Lines start at $50,000 — and have no set maximum
Cons
Limited to businesses based in Illinois or Wisconsin,$100 annual fee
No online application
Loan amount
Starting $50,000
APR
Starting at 1.5%
Loan Term
Varies
Requirements
At least two years in business, located in Wisconsin or Illinois, business member of Consumers Credit Union
American First offers simple business loans with no minimum amount and a quick approval turnaround. But it only serves businesses in Utah, Nevada, Arizona and Idaho. And while its rates are capped at the standard 18% APR for credit unions, it's not clear where they start.
Pros
No minimum loan amount
Works with SBA lenders
Competitive rates
Cons
Loans capped at $15,000
Limited to businesses located in 4 states
Not up front about where rates start
Loan amount
Up to $15,000
APR
Up to 18%
Loan Term
Up to 60 months
Requirements
Business member, proof of current or future income
Northwest FCU offers loans to businesses in all 50 states — and they're available to startups, too. While its loans start at $50,000, there's no cap to how much you can borrow. But you must have a personal credit score of at least 680 and may need to provide collateral for larger loans. It also charges a one-time application fee of around $250.
Pros
Borrow as much as you need
Available in all 50 states
Open to startups
Cons
Low customer ratings
Branches only located in Virginia
Application fee of around $250
APR
Up to 18%
Min. Credit Score
680
Requirements
Be a business member of Northwest FCU and have a credit score of at least 680.
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 require all businesses to become members either before or during the application process, which typically involves opening a business checking or savings account. Membership is often limited to a few states or industries and can sometimes be more difficult to qualify for than the loan itself.
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. In fact, the National Credit Union Administration doesn’t allow federal credit unions to charge interest above 18% on any loan products, including business loans. Many credit union business loans also don’t have any application or origination fees, which come standard with most other types of business financing.
But they’re not without some downsides. Credit unions are notorious for being mismanaged, and getting a business loan can take a lot of time. They often don’t invest as much in technology or customer service as other lenders, and many don’t even have an online application. And since they’re such 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. Federal credit unions legally can’t charge more than 18% interest on their loans, and many others charge even less.
Fewer fees. Credit unions often charge fewer origination and application fees than banks or online lenders. Some don’t even charge late or prepayment penalties.
Affordable small-dollar financing. Looking for a loan under $5,000 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 better run your small business.
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.
Supporting your community. Most credit unions are local organizations that serve the community around you. Borrowing from one is an easy way to give back and empower others to do the same.
Are there any drawbacks?
Low-tech institutions. Credit unions often don’t invest much in their websites or other technology, making for slow applications and glitchy apps.
Hard to qualify. Many 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 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.
Poor customer service. One of the top customer complaints against credit unions is the quality of customer service. It can often be hard to get in touch with a representative or correct a mistake.
Compare online business loans you can apply for today
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Ready to get financing through a credit union? Follow these steps to compare lenders and find a loan that fits your business’s needs.
Know what you’re looking for. How much money does your business need to borrow? Do you want to back your loan with collateral? Are you willing to pay a little extra to save time on the application? Knowing your priorities before you start your research can help you make a faster comparison.
Do your research. Try to find a credit union that serves businesses in your area that matches your criteria. Since credit unions are often regional, your options are likely very different from what’s available to a business across the country.
Stop by or give them a call. There’s a high chance you won’t be able to find all of the information you need on the credit union’s website. Calling customer service or stopping by a local branch might be the only way to find out if your business is eligible for membership and financing.
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.
Gather your documents. Once you’ve settled on a credit union, having all of the documents and information you need on hand can seriously speed up the application process.
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.
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 any loan documents.
How do I join a credit union?
The process of becoming a business member differs between credit unions. Some require business owners to become individual members to 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 call or visit your local branch to learn more. Generally, becoming a member involves opening up some kind of business account and depositing around $25. 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 need money fast or want to fund a large project.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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