Opening a new business or expanding an existing one takes a lot of capital. While you may have some savings set aside, most entrepreneurs need additional financing to get their business off the ground. Instead of using a traditional bank, you may want to consider obtaining a loan from credit union. Here are three key benefits of going the credit union route.
1. It’s Easier to Qualify for a Small Business Loan
As you probably know, qualifying for a small business loan isn’t easy, especially for newer entrepreneurs or smaller companies without a lengthy credit history. Banks tend to prefer lending to established businesses that pose little default risk. Credit unions take a more personalized approach. Since they are non-profit cooperatives owned by members, they make lending decisions based on more than just financial statements. This improves your chances of qualifying for a loan from a credit union to start or grow your business.
2. Lower Interest Rates Save You Money
In addition to more flexible lending requirements, a loan from credit union often comes with a lower interest rate than traditional bank loans. Credit unions can offer below-market rates because they don’t have the same profit-seeking motives as large banks. The interest you save with a loan from a credit union remains in your pocket instead of being paid to an investor-owned institution.