Choosing the right financial institution for your business is a big decision. A key consideration, though, is not just what you need immediately, but what you might need 12 to 24 months down the road. For that reason and several others, a credit union might be just the choice to help you stay successful.
The difference between credit unions and commercial banks can be best illustrated by one core concept: ownership. For commercial banks, “ownership” boils down to shareholders. Their primary goal is to generate profits that are returned to shareholders in the form of dividends.
From a customer's perspective – whether their account is personal or business – there are a number of problems with this business model; the first of which is prioritizing profits over people. By putting more money in shareholders' pockets, commercial banks take the focus away from the customer. The relationship with the customer then takes a back seat to making shareholders happy.
On the other hand, credit unions take a different approach. They aren't owned by shareholders – they're owned by their members. That means when you do your business banking with a credit union, you can expect a relationship – one that grows with the needs of your business.
Simply put, big banks are profit-driven, not relationship-driven. Even though banks and credit unions are both financial institutions, they have a surprising amount of differences. However, if you take your business banking to a credit union, those differences can really work to your advantage. Here are some examples:
1. Member-owned. Being member-owned means credit unions have a finger on the pulse of what their members actually want. What's more, having a strong presence in local communities – not just bustling city centers – allows credit unions to position themselves alongside the goals of other community members and organizations.
2. Fewer fees. Whereas a commercial bank typically charges a business accountholder high monthly maintenance and transaction fees, credit unions try to take the emphasis away from that. Because credit unions are not-for-profit, they generally charge fewer (and lower) fees on their business accounts. In addition, they provide more value to their members in the form of offering lower loan rates and paying higher dividends on deposit accounts.
3. Local market knowledge. A credit union's charter or field of membership is generally locally based or they at least have a local presence in your area. To a business owner, there's a lot to like about that. At BECU, for example, you're not getting a business loan reviewed by an underwriter in another state. You're getting local market knowledge from a local industry professional, which puts you in a position to get the best loan for your specific type of business. Once your loan is approved, you can leverage that knowledge for future business decisions.
4. Service that cares. Commercial banks are notorious for long hold times and customer service that leaves something to be desired, while credit unions were built on the philosophy of putting their members first. Whether you're an aspiring entrepreneur or making the switch after 10+ years in business, your time is valuable, and service is paramount when deciding on a financial institution. A credit union's goal isn't to make a quick buck off another account being opened – their goal is to help you succeed in making your business flourish.
5. A variety of tools and resources. The business products available at a commercial bank and credit union are virtually the same. However, the rates and fees of those products may differ at each institution. At BECU, we support businesses by offering competitive checking and saving accounts, business loans, credit cards, and investments, as well as partnering with best-in-class providers to offer payment processing and payroll/HR solutions. In addition, both commercial banks and credit unions make it easy to bank from anywhere using online and mobile banking. Most credit unions also participate in the shared branching network, which allows businesses to make deposits and withdrawals using ATMs of other credit unions across the country – for free.
While big banks and credit unions share much in common, the difference is in the details. Banking with a credit union is more than a business transaction – it's a relationship; one that you can leverage time and again as your ideas and needs evolve.
To learn more about business banking with BECU, visit becu.org/business.