With the recent surge in banking fees, many consumers have made the switch from traditional, large banking institutions to alternatives, such as small community banks or credit unions. However, what many small business owners may not realize is that credit unions also offer the same benefits those consumers are experiencing to small businesses.
A recent feature in Consumer Reports noted that it costs a large bank $350 to $450 to maintain a checking account annually compared to $175 to $240 for a credit union, “translating to higher fees, higher balance requirements, higher loan rates and lower deposit rates.” In many cases, business owners are also experiencing fee hikes at the same or even greater rates than consumers.
“It only makes sense for small business to follow the lead of consumers and switch to a credit union,” says Robert Myles, senior vice president of lending/asset protection at Telhio Credit Union. “For a small business owner, a credit union is a perfect fit. It’s really about the time a credit union can take with the business owner. We can get to know their businesses in a way that other, larger banks can’t. We truly specialize in small businesses, but also, we are owned by our members, so we’re not beholden to shareholders. We’re 100 percent focused on the member sitting right across the table from us.”
A major difference between a large banking institution and credit unions is the way lending decisions are made.
“We’re able to say yes a lot of times when others say no because we can look at the whole picture, rather than just reviewing an application,” Myles says. “We really make our lending decisions based on the conversations we have with the business owner. We learn about their plans for the future, how they are adjusting their business plan based on their objectives and the current economic climate, etc. And we have discretion in our lending; we don’t have a one-size-fits-all policy.
“Through those conversations, which take place at least quarterly when we partner with a business owner, we are not only able to help the owner figure out what they need in terms of lending options, but also if they need other services as their business grows. For example, at Telhio, we have a program called Select Employer Groups. This is a free on-site banking service that businesses can offer their employees. It’s a great benefit that costs the employer no money.”
So what do you look for in a credit union if you are looking to make the switch? Here are a few tips:
1. Convenient locations. Many credit unions may only have one or two locations. As a business owner, if you need to make deposits regularly, get startup change, etc., you’ll want to ensure you have a convenient, local branch location.
2. Wide array of services. You want to find a credit union who can be your partner in all financial needs. As a small business owner or startup company, you may not even be aware of all of the financial issues you may face. Do need a line of credit to even out cash flow? Do you have a partner and need a buy-sell agreement? Do you need to offer a retirement plan to your employees?
Additionally, be sure that the credit union has stayed current with technology– mobile banking, online banking and text alerts. A credit union that has a full spectrum of financial services, including accounts, investment advisors, merchant services and business loans, is your best bet.
3. Stability. What is the track record of the credit union? Is it strong and stable? Look at the financial reports of the institution and review the longevity of the credit union in its community. How long has it been here and has it served its members well in that time?
4. Business services team experience. Is the team that you will be working with as a business owner experienced and business savvy. Do they understand small business and respect the lack of time and resources many small business owners have? Will they do everything they can to make your banking process as easy and simple as possible? It doesn’t hurt to set up a time to interview your potential banker. You do this with employees. Why not the people who will be handling the money end of your business, too? If they are unwilling to take the time to talk with you, that answers your question right then and there!
Telhio Credit Union is open to everyone who lives, works, worships or attends school within Franklin County and surrounding communities. Founded in 1934, originally as the credit union for the Columbus Telephone Co., Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct.
Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers seven branching offices throughout central Ohio and nearly 4,000 shared branching locations nationwide. Additionally, Telhio participates in the highest level of combined federal and private share savings insurance available, insuring deposit accounts up to $500,000.*
* Federally insured by NCUA. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company.