Commercial Business Loans

Yes, credit unions provide credit union business loans to their members. Credit union commercial loans include term loans, commercial real estate financing, equipment loans, lines of credit and working capital solutions. 

There are many benefits of a credit union for business loans, such as competitive rates and personalized service. Before applying, you’ll need to become a member of the credit union, which typically involves meeting their membership criteria and paying a small membership fee.

Business loans from credit unions often provide distinct advantages over traditional bank loans. This includes:

• Competitive interest rates: Credit unions are not-for-profit financial institutions that focus on member satisfaction, which allows them to offer more competitive rates than traditional banks. This structure often results in significant savings over the life of the loan.
• Reduced fees and closing costs: Members typically benefit from flexible origination fees, application costs and closing expenses since credit unions prioritize member benefits over profit margins.
• More flexible lending criteria: Credit unions often take a more holistic approach to loan approval, considering factors beyond credit scores and financial statements. This can include your relationship with the credit union and the local impact of your business.
• Personalized service and local decision-making: Loan decisions are typically made locally by people who understand your market and community. This results in faster approvals and more customized solutions for your business needs.
• Higher approval rates for small businesses: Credit unions are often more willing to work with small businesses and startups than traditional banks. They may offer more flexible terms and conditions to help businesses succeed.
• Financial counseling and business support: Credit unions frequently provide additional resources and guidance to help ensure the success of your business. This can include financial planning, teaching you how to build good credit, business coaching and networking opportunities.

Most credit unions require a good credit score of at least 680 for a credit union small business loan. However, requirements vary by institution. Some factors that influence approval include:

• Business cash flow:Your company’s track record of managing cash flow and generating sufficient cash to cover debt service is crucial in the approval process. A strong business cash flow can help offset personal credit limitations.
• Time in business: Most credit unions prefer companies that have been operating for at least two years, as this demonstrates stability and business sustainability. Newer businesses will have to overcome a lack of established cash flow and business history. Oftentimes access to personal credit can help a newer business, such as a Home Equity Line of Credit. Credit unions can help identify additional resources for newer businesses.
• Debt-to-income ratio: This important metric helps lenders assess your ability to repay additional debt while maintaining healthy cash flow. A lower ratio generally improves your chances of approval.
• Collateral requirements: Some loans may require business or personal assets as security. The collateral type and value can affect approval odds and loan terms.

A credit union business loan can be an excellent financing choice if:

• Competitive rates are within reach: Your business and personal credit profiles position you for favorable interest rates that align with your budget and growth plans.
• You have a solid business plan: You have developed a detailed plan for using the loan funds and can demonstrate how the financing will contribute to your business’s success.
• You understand cash flow management: You’ve focused on creating a budget and clearly understand how loan payments will fit into your monthly expenses.
• You value personalized service: You prefer working with financial institutions that take time to understand your business needs and offer customized solutions.
• You want a local financial partner: You seek a community-based lender who understands your local market and can provide relevant business guidance.
• You have strong financial literacy: You understand how to save money and have implemented clear strategies for managing business finances while growing your company.

To apply for credit union business loans, follow these steps:

1. Become a credit union member: If you’re not already a member, you’ll need to join, which typically involves opening an account and meeting specific membership criteria.
2. Gather your documentation: Prepare all necessary paperwork, including your business plan, financial statements, tax returns for both personal and business, recent bank statements, legal documents and information about any collateral if required.
3. Submit your application: Fill out the comprehensive loan application completely and accurately, double-checking all information before submission.
4. Meet with a Relationship Manager: Meet with a credit union representative to discuss your business needs and loan requirements in detail.
5. Wait for processing: Use this time to revitalize your business routine while your application is under review.
6. Review and accept terms: Evaluate the offered loan terms carefully and accept them if they match your business needs and financial capabilities.
7. Complete final paperwork: Provide any additional documentation the credit union requires to finalize your loan process.

Most credit unions process applications within a few weeks. However, this varies by institution and loan type.