Best Credit Unions for Business Banking of 2023

Using a credit union for business banking might not be your first thought when you start a business, but that doesn’t mean it’s a bad idea. Credit unions work very similarly to banks, with one key difference – their account holders, not shareholders own them.

That means that credit unions work for the benefit of their customers, including their business customers.

Best Credit Unions for Business Banking

These are the top credit unions for business checking.

What is a Credit Union?

A credit union is a financial institution that works very similarly to a bank. It offers checking and savings accounts, loans, and other financial services.

What makes them different is that they are member-owned nonprofits. Where banks are often owned by a group of shareholders and work to generate a profit for those owners, credit unions are owned by their members. Typically, to open any account at a credit union, you need to put a few dollars in a share savings account to establish your ownership in the credit union.

Because credit unions are nonprofits and owned by their customers, they work in the interest of their account holders. That often means better interest rates, lower fees, and better service than at a bank.

One unique aspect of credit unions is that they must have eligibility requirements for membership. Some have eligibility requirements regarding your employment or where you live. Others make it very easy to become eligible, such as by allowing anyone who makes a small donation to a specific charity able to open an account.

Features and Drawbacks of Credit Unions for Business Banking

Using a credit union for business banking has pros and cons. You need to consider both before you open an account.

Pros

• Nonprofit. Credit unions are nonprofits and are owned by their account holders. You can feel more confident that a credit union will operate in your best interest than you can with a bank.
• Better rates. Many credit unions offer better interest rates, both on deposits and on loans, than banks. That can help your business save money.
• Fewer fees. Another source of savings for your business is that many credit unions keep fees lower than banks.
• Flexibility and service. Credit unions are smaller, community institutions. They can often provide better service and be more flexible than bans. If you need something for your business, like a specific banking service or a loan, a credit union might be able to be more flexible when it comes to helping you out.

Cons

• Smaller footprint. Credit unions are much smaller than banks. They’re usually highly local or regional institutions, so you might not be able to use one if you plan to expand significantly. You may also have a limited number of branches or ATMs to visit.
• Technology. Because credit unions are smaller, they may not have the same technology infrastructure as large banks. That can mean outdated mobile apps or websites.
• Eligibility requirements. You might not be eligible to open an account at the best business credit unions. Banks, on the other hand, don’t limit eligibility.

How To Open A Credit Union Business Account

When you've settled on a credit union, follow this simple guide to get your account up and running:

• Pick Your Account Type: Evaluate and select a business account that aligns with your needs. Pay attention to details like monthly charges, transaction caps, and the account's APY.
• Begin the Membership Process: Typically, you can initiate your account while applying for membership. Most credit unions make this procedure straightforward.
• Be Ready with Required Details: Ensure you have pertinent business details at hand, such as your business's name, address, EIN, and some personal specifics.
• Wait for Approval: Depending on the credit union, the approval can be almost instantaneous or might take a few days.

How to Choose Credit Union for Business Accounts?

To choose the best credit union for your business checking account, consider the following.

• Eligibility. The first thing to think about is eligibility. You have to meet the requirements to open an account at a credit union, so there’s no reason to look at accounts you’re not eligible for.
• Fees. Consider how much you’ll pay to use the account. That includes both maintenance fees and other costs such as transaction fees for frequent deposits.
• Interest rates. Many credit unions offer interest on business checking accounts. If you want to earn some extra cash, try to find one with a high interest rate.
• Online services. Many credit unions have limited online services compared to large banks, but that’s not true of all of them. If you do a lot of your business online, look for a credit union that prioritizes its online service.
• Other services. Getting a great business checking account is important, but don’t forget your business’s other needs. If you can find a credit union that also does business lending or insurance, that can make your life much easier and let you keep all of your business finances in one place.

Are Credit Unions Better Than Banks?

Credit unions often outshine banks in several areas. They typically levy fewer and more affordable account-related fees, such as monthly upkeep and transaction charges. Moreover, they generally offer bank accounts with higher interest rates while providing loans at more favorable rates. Enhanced customer service from credit unions usually translates to positive feedback from patrons.

However, credit unions do have limitations. Their membership criteria can be restrictive, and they tend to have fewer physical branches. As a result, many individuals might find credit unions inaccessible. In contrast, banks cater to a broader audience, have more extensive branch networks, and usually don't have membership restrictions.

When To Consider a Credit Union for Your Small Business

When weighing the choice between a credit union and a bank for your small business needs, it's essential to evaluate the benefits each offers. Compare not just the features but also any perks you might receive from a credit union versus a bank. Although credit unions might come with specific membership prerequisites and potentially higher initial fees, they often compensate with a more attractive APY for checking and savings accounts and more competitive loan rates.

However, convenience can be a decisive factor. If having access to a physical branch is crucial for you, a traditional bank with a broader network might be more suitable for your small business, as they usually boast more brick-and-mortar locations.

Bottom Line

A credit union might not be the first place you look for a business checking account, but there are lots of benefits to using one for your company. They often offer lower fees, better interest rates, and greater care and service for your company. Consider a few different options and try to choose the credit union that best fits your business’s needs.

Frequently Asked Questions

1. Is your money safe in a credit union?

Yes, your money is safe at a credit union. The National Credit Union Administration (NCUA) offers insurance much like the FDIC.

2. Do credit unions give interest on checking accounts?

Yes, many credit unions do pay interest on checking account balances.

3. Why use a credit union rather than a traditional bank for business banking?

Credit unions have many advantages over traditional banks for business checking, including better customer service, lower fees, and the ability to earn interest but online banks are comparable.

About The Author

TJ Porter

Freelance Personal Finance Writer

TJ Porter is a Boston-based freelance writer who specializes in bank accounts, credit, and credit cards. He’s written for Bankrate, Credit Karma, MoneyCrashers, DollarSprout and My Bank Tracker, among others. In his spare time, TJ enjoys cooking, soccer, reading, and video games. You can connect with him on his website, tjporterwriting.com.

Articles by TJ Porter (22)

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