Running a small business comes with countless decisions, and where you choose to bank can have a big impact. Credit unions can offer competitive advantages over traditional banks, including lower fees, more flexible lending options, and a customer-first approach that can make a significant difference in terms of your bottom line.
At Remitly, we understand that small business owners need to work with financial partners who prioritize their growth and success. That’s why we’ve created this guide to help you navigate the benefits of credit unions for small businesses. Whether you’re launching something new or growing your existing business, this article can help you make an informed decision about the best banking option for your company.
Exploring business accounts with credit unions
Credit unions can be a compelling alternative to conventional banking, offering advantages worth exploring for entrepreneurs and small business owners.
Choosing a business account at a credit union instead of a bank has a variety of advantages, including:
- Lower fees and costs, both to set up and maintain your account
- Flexible loans with lower interest rates
- A more personalized customer experience
- Savings accounts with higher interest rates
How credit unions differ from commercial banks
The biggest difference between credit unions and commercial banks is their structure. Most commercial banks are for-profit and owned by shareholders. Their ultimate goal is to generate returns for those shareholders, not offer customers the best options.
Anyone can set up an account with a bank, and they usually offer many different banking products to businesses. Most banks have many branches and ATMs across the country. They usually also have a full suite of investment and saving products and services.
On the other hand, credit unions are nonprofit and fully owned by their members. Any earnings are reinvested into benefits for members, like lower interest rates, better services, and higher dividends. Members can also vote on a credit union’s policies.
Unlike banks, credit unions have membership requirements. Local credit unions may limit members to constraints like a school, place of worship, or geographic area. National credit unions, however, may have broader requirements as they want to increase membership.
Credit unions usually have significantly fewer ATMs and branches than commercial banks. However, most credit unions form part of the CO-OP shared branch network of more than 30,000 ATMS and 5,000 branches. Members of any participating co-op can use the ATMs with no fees and perform many in-person operations at any of the branches.
Historically, credit unions have offered more limited banking services geared towards moderate-income individuals. They also face greater limitations than commercial banks on things like investing and business banking due to regulations. However, more credit unions are offering business services at competitive rates.
Deposits in both credit unions and banks are federally insured for up to $250,000. Banks are insured through the FDIC and credit unions are insured through the NCUA.
Business checking accounts: a key offering
Many credit unions offer both business checking and savings accounts. Checking accounts are great for small businesses that want to increase their business professionalism, organization, and legal protection.
While their exact features may vary, most business checking accounts at credit unions offer:
- Digital banking app access
- Mobile check deposit
- Payroll direct deposit
- Wire transfers
- Ability to grant others account access
- Electronic statements
- Low or no monthly fees
- Dividends
- No or small deposit to open
- Up to a certain amount of free check deposits per month
Benefits for small business owners
A business checking account can be a great benefit for small business owners. Some of the biggest benefits include:
- Separating business and personal income and expenses
- Bookkeeping and merchant services integration
- Simplified tax planning and maximized deductions
- Easier to get a small business loan or line of credit
Requirements for opening a business checking account
When you find the right credit union for your business, you’ll need to fulfill certain requirements to open a business checking account:
- Make sure you’re eligible for membership. While many credit unions restrict membership to a certain area, some credit unions let anyone become a member by donating a small fee to a partner association or foundation.
- Collect the required documentation. This may include:
- Your Social Security number or Business Tax ID
- Legal business name and DBA (doing business as) name
- Date of business establishment
- Government-issued personal ID, such as a driver’s license
- Business formation documents
- Ownership agreements
- Any necessary documentation to support your eligibility
- Relevant bank statements if you’re moving your account from another financial institution
- Depending on the credit union, you can either submit an initial application online or go to your local branch to meet with the branch manager or relationship manager. At this meeting, you’ll also discuss your needs so the credit union knows how to best serve you.
Using branch and online banking services
Most credit unions have both local and online banking options. While credit unions often only have branches in a specific region, there are some larger ones that offer nationwide services.
As previously mentioned, many credit unions are part of a shared branch network. This means that most in-person functions can be performed at potentially thousands of different credit unions across the country. However, more specific services like business planning may sometimes only be done at a branch of your actual credit union.
Almost every credit union has online or mobile banking, either through a website, an app, a phone line, or all three. Typically, you can use these channels to:
- Check account balances
- Transfer funds
- Pay bills
- Deposit checks
- Add bill payees
- Find ATM and branch locations
However, the range of online banking services depends on your credit union.
Financial solutions and business services
While not every credit union offers the same full business service suite as banks, more and more of them are offering an expanded range of financial services for you and your business. In fact, in 2023, 62% of credit unions said they were planning to expand their business services and target a business niche over the next few years.
Beyond business checking and savings accounts, many credit unions offer some or all of the following business and financial solutions:
- Competitive business credit cards
- Term loans
- Small Business Administration (SBA) lending
- Lines of credit
- Real estate loans and development
- Payroll processing and management services
- Merchant services
- Educational resources like workshops and business advisors
Business savings for small firms
As previously mentioned, since credit unions are nonprofit and member-owned, their goal is to serve you best, not maximize revenue.
Credit unions can help you save money by offering fewer fees than a bank, lower credit card interest rates, and more flexible loans with lower interest rates. As credit unions tend to have a more personal relationship with customers than large commercial banks, they work with you to find the best solutions based on your business’s current financial situation.
Member returns come in a variety of forms. From increased dividends to even lower interest rates to enhanced services, as credit unions grow and expand, your benefits may, too. Local credit unions also reinvest funds within the community, which can additionally fuel small business growth in the area.
Investment opportunities and tailored business solutions
Depending on the size of your credit union, many also offer mostly low-risk investment opportunities for both personal and business accounts. This can include:
- Financial advisors
- Certificates of Deposit (CDs)
- Bonds
- Mutual funds
- Self-directed online investing
- Money market accounts (MMAs)
Like with their other services, credit unions usually treat investing as a relationship with your business and work with you to build a portfolio tailored to your needs and risk appetite.
Credit unions also might offer business planning services. Their associates can work with you directly at your local branch to help you develop financial literacy, evaluate your business, and create a business plan.
Top credit unions for business needs
If you think a credit union is right for your business, here are some of the top credit unions that frequently work with businesses, along with their membership requirements and benefits.
Evaluating credit unions based on business solutions
When choosing a credit union to open an account for your small business, there are important considerations to take into account based on your business and its needs, including:
- Regular service fee amounts
- Minimum required account balance
- Yields and dividends
- Loan options and repayment plans
- Online and mobile banking
- Branch and ATM access
- Specific financial services, like payroll services or business planning
A summary of leading credit unions for small businesses
While the best credit union for you depends on your business’s situation, some credit unions are recognized for offering strong business banking services.
Notable Pick: Affinity Plus Federal Credit Union
- Membership qualifications: Live, work, study, or worship in eligible regions, be affiliated through a family member or employer, making a one-time $25 donation to the Affinity Plus Foundation
- Features: Over 60,000 nationwide ATMs, CDs, MMAs, no-fee business credit cards, vehicle and real estate loans, lines of credit, coin services
- Potential drawbacks: Limited branches (specific to the state of Minnesota), low checking and savings account yields
For a wide range of financial services: America First Credit Union
- Membership qualifications: Live, work, worship, volunteer, or study in eligible regions, employees or members of their select employer group or family of current members
- Features: Business credit card with rewards, loans, non-profit business accounts, merchant processing, payroll services, business bill pay, remote deposit, automated clearing house (ACH) services, wire transfers, business planning, business registration services, Zelle money transfer service
- Potential drawbacks: Somewhat narrow field of membership
For investing: Consumer’s Credit Union
- Membership qualifications: Become a member of the Consumer’s Cooperative Association with a $5 membership charge, which CCU will reimburse. Your company must do business in Illinois or Wisconsin, and you must open a business account in person.
- Features: Business MMAs, credit cards, four types of high-yield checking accounts, better interest rates the more your account is used, national ATM network, business bill pay, ACH services, check fraud protection, merchant services, commercial lending, lines of credit
- Potential drawbacks: Geographically limited membership, having to open an account in person
For flexibility and scalability: Credit Union 1
- Membership qualifications: When applying online, Credit Union 1’s system will determine if you are within its field of membership. If you’re not eligible, you can also apply for membership under the Credit Union 1 Educational Development Association with a $5 donation. There’s a one-time $5 membership fee and a $5 initial account deposit.
- Features: Online bill pay and treasury management, sweep accounts, SBA lending, business credit cards, CRE loans, 90,000 ATMs, and 5,000 shared branches, three scalable business checking account options
- Potential drawbacks: High ABD to waive monthly fees, low checking and savings account yields
For saving: Digital Federal Credit Union
- Membership qualifications: Those who live, work, worship, or study in its field of membership, work for or with eligible employers, organizations, and homeowners associations, family of any current member
- Features: High-yield savings accounts, variety of loans and lines of credit, technology-forward, MMA savings accounts, IRA certificates for employees, unlimited check writing, 20 free deposits per day, $0.01 ADB required, large nationwide ATM network
- Potential drawbacks: No business credit cards
For military and their families: Navy Federal Credit Union
- Membership qualifications: US military service members, veterans, Department of Defense (DoD) personnel, and their families. Business checking accounts must deposit a minimum of $250 (sole proprietorships) or $255 (other legal entities) when opening an account.
- Features: Largest credit union in the country, competitive yields for checking and savings accounts, MMAs, CDs, merchant services, payroll processing, business insurance, business credit cards, commercial real estate loans, lines of credit, term loans, nationwide and international NFCU branches and ATMs
- Potential drawbacks: Membership is strictly limited, high opening deposit required for business accounts
Finding the right credit union for your small business can lead to substantial savings, better service, and flexibility—especially if you’re looking for a more community-driven approach. By comparing your needs to the offerings of top credit unions, you can build a banking relationship that supports your business goals.
FAQ
Can businesses be members of credit unions?
Yes, businesses can be members of most credit unions. Like joining a credit union as an individual member, your business has to meet certain eligibility requirements. You must usually gather required documentation and apply either online or in person.
Why are credit unions cheaper?
As credit unions are non-profits and owned by their members, all profits credit unions make are passed on as savings to members. This can mean lower or no monthly fees, better interest rates, and higher dividends, leading to savings for you.
Is it better to get business loans from credit unions?
Depending on your business needs, commercial loans from a credit union may be more beneficial to you. Their nonprofit status means that you’ll usually find more flexible loans with better interest rates. Plus, as a member, their more personalized services may help you choose the best loan for your situation.
How can you build small business credit with credit unions?
Credit unions make it easier for small and medium-sized enterprises (SMEs) to get access to finance options and build their credit. Since you’re a member, you’re typically more likely to be approved for a loan or line of credit at a local credit union than at a large commercial bank. Plus, since many credit unions offer business planning services, they can help you to take steps (like incorporating your business) that further improve your credit.