The majority of the time, the moment business proprietors (new entrepreneurs or owners with experience) consider financing their business, they are thinking about their local banks, which they ought to. In the end, they frequent these banks every day and could be able to have an account with them.
There are occasions that these banks may not be the best option for obtaining a required business loan, either because the bank doesn’t provide the product that your company requires or (like many of us today) your business doesn’t meet their strict requirements.
However, it does not mean that you cannot access the capital your business needs for everything from starting up funds to growing your established business – through an alternative financial institution than your banking institution.
Do you realize that a few local credit unions offer business loans? Do you know that even if you don’t, they offer other products for financing that can be used to grow or start your company?
Credit Unions For Business Financing
Suppose you are able to get a money loan through your institution, excellent. It’s a good idea to start there. If you’re not able to, just drive straight to the local credit union to see the loan options they have available.
Not only do you have an excellent chance of obtaining the money you require, but you could also be able to get it at a lower cost and with less stress.
Let me clarify: First, we’ll call them CU for ease of use.
When it comes to financing for businesses, provide the following advantages:
1.) Business Loans
Some CUs offer true business loans. They are similar to the products your bank provides. There is more that do this than you realize.
In addition, in many instances, even if the CU makes business loans, they typically don’t have the high standards of credit as other lenders have. The CUs are more focused on how your company and its loan affect the wider community, not only the bottom line. They typically have lower requirements for credit scores as well as higher ratios of debt and less overall collateral values and generally spend less time analyzing tax and income return data. In simple terms, their business loans (the identical products banks and other lenders for business provide) are much easier to be approved for.
According to the State Employees’ Credit Union in Raleigh, NC, when discussing the way they underwrite their product loans:
Our focus isn’t on making money but rather on providing good, honest service.
Thus, not only is the underwriting requirements more attainable, however, since they make their loans choices locally, they are more likely to take your personal story into consideration – which will only benefit you and the ability to be accepted.
2.) Personal Loans.
While banks also provide personal loans, however, CUs are able to offer simpler approval criteria. Additionally, they are more flexible with the products they provide so that their loans are suited to you and not vice versa.
You might be thinking that you do not need personal loans to finance your business. But, I’m here to inform you that any loans, commercial and personal, that originate from banks, credit unions, or private lenders are actually any personal credit.
Here’s the reason. You make an application for a business loan – the kind of lender is irrelevant, and you must go through the various hurdles needed to qualify. They assess your income or earnings as well as your debts and obligations, and then they examine and evaluate your collateral, and at the end of the day, they decide to approve your application.
They will tell you the number of your monthly payments will be, they inform them how they intend to add a claim on your assets, and then – and here’s the kicker the fact that they require you to make a personal commitment even for an enterprise loan.
This personal guarantee takes away the other nonsense regarding credit for business. If you or your company does not pay in accordance with the terms agreed upon, this personal guarantee allows the lender – private bank lender, CU in the event of a dispute, to pursue your personal assets and income to pay off the loan that is the exact definition of personal loans. The only thing you want to avoid when you apply for the business loan – to avoid the risk of personal responsibility is the only thing you cannot escape regardless of the type of loan you’re requesting.
But, there is nothing to say that you can’t make use of the funds of a personal loan and for business.
The bottom line is that if you are unable to obtain a business loan, consider the consumer or personal loans CUs provide. The money is just that in the end, and CUs can allow you to access the cash you require (personal and business) much easier.
3.) More affordable all The Way Around
As CUs are not-for-profit and have no monetary gain, they pay lower origination, application, and processing costs on loans. They also have fewer annual fees if they exist (say on credit lines). In addition, they typically have less interest.
Anything that doesn’t do anything but help for you or your company. Why pay more when you don’t need to?
From MyCreditUnion.gov, Credit unions provide:
The fees and rates for loans at credit unions tend to be less expensive, and interest rates that are returned (dividends that are paid out on deposits) generally are higher in comparison to banks and other profit-making institutions. Credit unions are managed democratically by members, which gives the members of the accounts to have an equal voice in the way the credit union is run regardless of how much they’ve invested in the credit institution.
As I’ve hoped to emphasize in this article, if you have established a relationship with your local bank that you trust, then go to that bank for your business’s loan requirements. However, if you don’t, or if they refuse to turn you down, there’s no reason not to simply drive over to your nearest credit union to check to see if they’ll accept your request.
Credit unions have a number of advantages for financing for businesses, such as being easier to get. In the end, what really matters is the form in which your business loan is offered? The money is just that in the end.