Difference Between a Business Loan From a Credit Union and a Bank
Starting a new business, or taking a current business to the next level, requires making wise choices. One of those choices typically includes where to seek a business loan. Potential entrepreneurs must decide if banks or credit unions offer the best options. Exploring some of those options and how they differ can help one make the appropriate decision.
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Non-Profit Vs. For Profit
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Any profit made by a credit union benefits its members (after paying operating expenses) since credit unions are non-profit organizations. A bank's primary purpose, however, is to make a profit for its investors and stock holders.
Member Vs. Customer
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You'll find that for the most part, credit unions consider the people who use their financial services to be members, not customers. So a credit union is run by its members; you're part owner in the enterprise.
Most banks are run by investors who have a large amount of capital for funding the bank, and their primary interest is to make money off their customers.
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Higher Rates Vs. Lower Rates
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Because most credit unions use their profits as dividends (a portion of business profits) for their members, financial rates offered at a credit union are usually much lower. Banks may create new fees and policies to boost profits.
Bank Branches Vs. Credit Union Branches
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Several banks, such as Wachovia or Bank of America, have branches in many states, so it's easy to meet with a bank representative about your business loan in person. Most credit unions are only in certain areas; one may have a branch in your state, but not in a state to which you relocate or travel.
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References
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