Credit union business loans

Credit unions are nonprofit financial institutions owned by their members. With lower overhead costs than banks and other for-profit lenders, credit unions often offer some of the most affordable rates and terms out there. But there may be a low limit short loan term to how much you can borrow.

So if you’re looking to save, don’t need money right away or just need a small amount, a credit union could be a right fit.

Which credit unions offer business loans?

Below is a list of some of the major credit unions in Canada who offer loans to businesses.

How do credit union business loans differ from other business loans?

The main difference between credit union business loans and other types of business financing is the application process. Credit unions will likely require that all businesses to become members either before or during the application process, which typically involves opening a business checking or savings account.

Another factor that sets credit unions apart is the cost. Because they’re nonprofit lenders, credit unions can often offer more competitive rates and terms than you might find elsewhere.

But they’re not without some downsides. If you’re not already a member, you may have to pay membership fees to join a credit union in order to get a loan with it. And since they’re relatively small operations, credit unions usually don’t have the reserves to fund large projects.

Benefits of getting a business loan from a credit union

• Highly competitive rates. Generally, credit unions charge less than traditional banks would charge for the same financial products.
• Affordable small-dollar financing. Looking for a loan under $25,000 without astronomical rates? A credit union could be your best bet.
• Membership perks. Many credit unions offer workshops and other free resources for members that could help you run your small business better.
• Faster than a bank. While many credit unions probably can’t get your business next-day financing, they typically have a faster turnaround time than borrowing from a bank.

Drawbacks of a credit union business loan

• Hard to qualify. Some credit unions only work with businesses that have been around for a couple of years and business owners with good to excellent credit.
• Large amounts are hard to come by. Many credit unions just don’t have the resources to fund projects over $50,000.
• Complicated applications. If you’re not already a member, your business typically has to fill out two applications to apply for financing: one for membership and one for the loan. And these can be highly detailed.

Compare a variety of business loans options

Credit unions aren’t your only finance options if you’re looking for a business loan. Besides banks, there are some organizations that primarily specialize in providing business loans. Check out the business loan providers in the list below to see more options.

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Product CAFBL	APR Range	Loan Amount	Loan Term	Minimum Revenue	Minimum Time in Business	Loans Offered	Broker Compliance
Journey Capital Business Loan	8% – 29%	$5,000 - $300,000	4 - 24 months	$100,000/year	6+ months	Term Loan, Line of Credit, Merchant Cash Advance		To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000. Journey Capital offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.	Go to siteMore Info Compare	loading Fetching your data...
Merchant Growth Business Loan	12.99% – 39.99%	$5,000 – $800,000	6 – 24 months	$10,000 /month	6 months	Unsecured Term, Line of Credit, Merchant Cash Advance		To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales. Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.	Go to siteMore Info Compare	loading Fetching your data...
Loans Canada Business Loan	6.99% - 46.96%	$500 - $500,000	3 - 60 months	over $10,000/month	9 months	Unsecured Term	Loans Canada is a loan search platform with access to multiple lenders. Applicants will be matched with a suitable lender based on credit history and borrowing requirements.	To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year). Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.	Go to siteMore Info Compare	loading Fetching your data...

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The 7 steps to getting a business loan from a credit union

Ready to get financing through a credit union? Follow these steps to compare lenders and find a loan that fits your business’s needs.

1. Know what you’re looking for. How much money does your business need to borrow? Do you want to back your loan with collateral? Knowing your priorities before you start your research can help you make a faster comparison.
2. Do your research. Try to find a credit union that serves businesses in your area and matches your criteria. Look at features like the interest rate, term length, application fees and membership fees.
3. Find out if you’re eligible. Once you’ve narrowed down your options, call customer service, stop by your local branch or submit a request for more information on the credit union’s website to find out if your business is eligible for membership and financing.
4. Become a member. While many credit unions allow you to submit your membership and business loan application at the same time, some may ask you to become a member first.
5. Gather your documents. Once you’ve settled on a credit union, having all of the required documents and information you need on hand can seriously speed up the application process.
6. Complete and submit the application. How the application actually works varies between credit unions. Some have a quick online form, while others might ask you to set up an appointment to apply in person.
7. Review and sign your offer. The turnaround time at credit unions is typically faster than a bank, but slower than an online lender. Once you get your offer, read it carefully to make sure it’s the right fit for your business before signing the loan documents.

How do become a credit union business member?

The process of becoming a business member differs between credit unions. Some may require business owners to become individual members first before they can open a business account. Others have separate, business-specific requirements that might be limited by location or industry.

Many credit unions don’t mention how business membership works on their websites, so you might need to email, call or visit your local branch to learn more. You can often apply to become a member along with your loan, though some credit unions require businesses to join first.

Bottom line

Credit union business loans are a good fit for established businesses looking for loans under $50,000 with competitive rates. However, they’re not ideal if you want to fund a large project.

To learn about your other business financing options, check out our comprehensive guide to business loans.

Frequently asked questions

• How hard is it to get a credit union business loan?

  It’s not easy. Credit unions often only lend to businesses that have been around at least two years and require owners to have good credit. However, there is less competition for credit union business loans, because less businesses apply to credit unions as opposed to banks.

• What's the best way to approach a credit union for a business loan?

  It depends on the credit union, but typically the easiest way to get started is to reach out to its commercial lending department. They’ll be able to give you an idea of how the application process works and if your business is eligible. You might even be able to get started on your application over the phone.

• The credit union approved my loan. Now what?

  Different credit unions have different ways of disbursing funds. Some might deposit your money into your business’s account with the credit union, while others might allow you to have the money transferred to your bank account of choice.

  Once you have the money, you’re free to spend it as your business needs or as dictated by your loan contract. Ask if you can sign up for automatic repayments, so you don’t have to waste time making payments each month. Reach out to customer service if you have any questions or notice any errors.

Written by

Anna Serio

Editor

Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio

Anna's expertise

Anna has written 61 Finder guides across topics including:

• Personal, business, student and car loans
• Building credit
• Paying off debt

Co-written by

Chelsey Hurst

Publisher

Chelsey Hurst is a publisher at Finder, specializing in banking and investments. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature. See full bio