When you have a business, you have to make a number of important and potentially stressful financial decisions. This includes choosing which financial institution you use. Some business owners may assume that banks are their only real option. However, credit unions are actually able to provide the same level of products and services for businesses. But is that alternative option right for your business? Read on to find out more about the differences between opening a business account at a bank and at a credit union.
Convenience and Accessibility
One of the greatest advantages banks have for business owners is that they’re very convenient. For example, it can be much easier to join a bank in the first place. This is because banks don’t have the same membership requirements as credit unions, which can sometimes be limiting. Different credit unions have their own individual membership requirements. Whether or not you’re able to join can depend, for instance, on where your business is located. So instead of only being able to join certain credit unions, you can basically join whichever bank you want.
Both banks and credit unions, however, continue to be very convenient once you open your business account. A business owner can get their insurance, banking, and various financial services all from the same institution.
Banks are sometimes more accessible than credit unions, such as having more locations and ATMs. Banks can use their larger profits to keep up with and invest in the latest technology features, meaning mobile and online tools. But more and more credit unions are adding these convenient amenities, so look around and find the services you want and need.
Products and Services Available
You really can get most of the same services and products banks offer for business accounts at a credit union. This includes insurance, small business loans, payroll processing, online cash management, business tools and calculators, and other helpful financial services. However, banks are still more likely to have more products than credit unions, such as specialized business account products and innovative loans. But, again, do some research.
For larger or ever-growing businesses, banks are typically better equipped when it comes to handling large business loans and transactions. However, some credit unions do have the capacity to not only handle but actively help rapidly growing businesses. This includes Rivermark Community Credit Union. Some small business owners may find that the combination of lower rates and fees and these helpful tools make credit unions ideal for business growth.
Quality of Customer Service
Credit unions are widely known for providing excellent service to business owners. Meanwhile, many large banks might, unfortunately, have less-than-stellar customer service. Because credit unions are smaller, community-based financial institutions, their service can feel much more personalized. With larger banks, it’s easy for business owners to feel lost in a crowd. Some smaller businesses prefer credit unions for that reason.
This personalized service can affect things such as loans. When a business applies for a loan, a bank might just look at their business portfolio. A credit union is more likely to look at the specific project the business owner wants the loan for instead. Credit unions are part of the community too, meaning they’re more apt to consider the larger picture of how the business could serve the community.
Plus, they’ll take the owner’s personal situation into consideration as well. If the business has some sort of financial problem, a credit union will be able to help it out much more quickly. Credit unions’ smaller sizes means decisions are made internally. So turnaround is much faster than at a large bank too.
For-Profit Versus Not-for-Profit
This may be the ultimate factor in choosing a bank or credit union for a business account. A potential downside of banks is that they’re, ultimately, for-profit institutions. This means they’re primarily concerned with making profits for their shareholders.
Credit unions are not-for-profit institutions. They’re primarily focused on their members, not on making profits for any stockholders. So, instead, credit unions can pass on their profits to help out their members. For businesses, this can mean more free accounts, lower fees, fewer fees, better returns on interest, and lower interest rates on loans.
This also means your business will be a part-owner of the credit union. Your business account deposits will be your member shares, and you count as a shareholder. As a member of a credit union, you actually have a say in certain aspects. For instance, the board of directors will be made up of volunteers who are voted on by credit union members.
The board members of banks, on the other hand, are paid. And they may not even be customers of the bank they’re on the board for. That makes a big difference in the decisions they make for their institution.
How to Choose
As you can see, banks and credit unions both have their advantages and disadvantages for business owners. Ultimately, the choice of whether a bank or credit union is best for your business account depends on your business’s needs, as well as what you value for your business account. Some questions you should consider include what the priorities of your business are, where your business is located, how large your business is, and how much your business will rely on generating interest.
For additional guidelines on how to choose for your business account, you can read more of a general breakdown about the difference between a bank or a credit union through financial resources such as Investopedia.
If you find that a credit union is the best for your business account, it doesn’t mean your decision-making is over. You still have to make sure you find the right credit union for your business. If you’re in Oregon, Rivermark Community Credit Union is an ideal choice for suiting your business’s needs and supporting its growth and goals. You can find more information about our business accounts and other services for business owners on our website.