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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.
11% to 18% | $2,500 to $25,000 | Up to 5 years | ||
2.96% to 10.76% | $10,000 to $250,000 | Up to 7 years | ||
6.15% to 10.15% | $500 to $25,000 | Up to 6 years | ||
5% to 7% | Up to $50,000 | Up to 20 years | ||
Starting at 1.5% | Starting $50,000 | Varies | ||
Up to | Up to $15,000 | Up to 5 years | ||
Up to 18% | Varies | Varies |
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.
Min. Loan Amount | $2,500 |
---|---|
Max. Loan Amount | $25,000 |
Interest Rate Type | Fixed |
Maximum Loan Term | 60 months |
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.
Min. Loan Amount | $10,000 |
---|---|
Max. Loan Amount | $250,000 |
Fee | None |
Interest Rate Type | Fixed |
Minimum Loan Term | 12 months |
Maximum Loan Term | 84 months |
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.
Min. Loan Amount | $500 |
---|---|
Max. Loan Amount | $25,000 |
Interest Rate Type | Fixed |
Maximum Loan Term | 72 months |
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.
Max. Loan Amount | $50,000 |
---|---|
Interest Rate Type | Fixed |
Min. Credit Score | 700 |
Maximum Loan Term | 240 months |
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.
Min. Loan Amount | $50,000 |
---|---|
APR | Starting at 1.5% |
Interest Rate Type | Fixed |
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.
Max. Loan Amount | $15,000 |
---|---|
APR | Up to |
Interest Rate Type | Fixed |
Maximum Loan Term | 60 months |
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.
APR | Up to 18% |
---|---|
Interest Rate Type | Fixed |
Min. Credit Score | 680 |
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.
Ready to get financing through a credit union? Follow these steps to compare lenders and find a loan that fits your business’s needs.
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.
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.
To learn about your other business financing options, check out our comprehensive guide to business loans.
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