Appropriate funding is one of the essential aspects when it comes to laying the foundation of a successful business. An entrepreneur can have a world-class idea. But if funds are scarce, then it can be challenging to make things work. The factor that comes to the rescue in such perilous times is a line of credit. But what is a Line of Credit, and how can it revive your business out of the financial crisis?
Firstly, we have to consider the available options when one needs to borrow money. These are primarily loans and lines of credit. In a loan, a financial institution sanctions you a particular amount of money to be repaid in a fixed amount of time. The banks start charging a rate of interest on the amount as soon as they disburse the loan amount. It doesn’t matter to the bank when you use the money, and that is a significant downside. The lines of credit that many financial institutions provide offer you access to an amount of money that you can use whenever you need it. You don’t have to pay any interest until you deploy the line of credit for your business.
So is there a feasible solution that can get you a line of credit at a lesser rate of interest? Well, the answer to that question is a huge yes! There are credit unions that offer you interest rates lower than those provided by banks. But what are credit unions, and how do they operate? To understand how these unions work, we have to dwell deeper to understand the bigger picture.
What are Credit Unions?
Credit Unions are cooperatives owned by members and offer financial services to their customers. They are controlled and operated by members only. Due to this operating mechanism, the rate of interest for credit provided is competitive. Credit unions with thousands of participants are present in almost all the nations of the world. They are not-for-profit organizations and hence, enjoy a tax-exempt status, which allows them to offer lower rates of interest. In the present day, there are over 300 million members in credit unions worldwide, with new members getting associated every day!
Credit unions are different from banks and other financial service providers because the people having accounts in credit unions are their members and owners. The members elect a board of directors by a voting process in which each member casts one vote. The amount of money invested by them is not taken into consideration, giving each member an equal right to participate in the proceedings. They are usually community-oriented and prefer to serve their members rather than making profits. The services provided by credit unions are similar to those offered by the banks.
But, credit unions prefer to use different terminologies. Typical savings accounts are referred to as share accounts, whereas certificates of deposit are known as share term certificates. Only members are allowed to deposit or borrow money. Members pool their money by making deposits, which means that they are buying shares. As a result of this, they can fulfill the credit and other financial demands of the fellow members. The income generated can be used for the welfare and development of the union and its members. According to surveys conducted amongst the customers, credit unions have shown higher customer satisfaction rates than banks.
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Advantages of credit unions over banks
Higher customer satisfaction rates clearly state the fact that there is something advantageous about credit unions. That’s why people prefer them over traditional banking services. Here is a list of the advantages that help credit unions to hold an edge over banks.
- Credit unions tend to return the resources and profits to their members, in the form of lower fees and competitive interest rates. Banks mostly focus on profit to benefit their shareholders and high-level executives.
- The chances of getting an individual or business loan from a local credit union are better in comparison to the local banks.
- The interest rates charged by credit unions on credit cards and business/personal loans are lower compared to that of big banks. Also, the deposits made by members are insured by the National Credit Union Share Insurance Fund.
- Credit unions nowadays have an extensive network of credit union ATMs, as well as a nationwide spread of service centers.
- Prominent credit unions have all the latest high-tech tools such as mobile banking, which makes accessing their services highly convenient.
- For over two decades, credit unions have offered better customer satisfaction when compared to big banks. Also, research has shown that they are one of the most trusted segments in the financial services sector
- Above all the rest, most credit unions have their membership open for anyone willing to join. The benefits begin from the very moment you enter the credit union.
Picking a strong credit union is the first thing that you should do. Here is a list of some prominent credit unions in the United States with their eligibility criteria.
Alliant Credit Union: Based in Chicago, Alliant Credit Union has been the best credit union in the US for a few years now. With just $5 needed to open an account, a low minimum deposit of $1000 is required to access the range of services provided by ACU. The loan terms range from 12 months to 5 years, and there are no monthly fees or minimum requirements. High rate savings account in ACU pays 1.65 percent APY. Members using out-of-network ATMs have to pay a nominal fee of up to $20.
Star One Credit Union: Based in Sunnyvale, California, Star One Credit Union is one of the most prominent unions in the nation. It offers the facility of free checking with a minimum deposit of $25 to open an account. Another plus point is that they don’t charge any monthly service fees and offer a monthly interest of 0.25 percent APY. The facility of student and rewards checking account is also available. The rewards checking account with Star One Credit Union offers a healthy yield of 1.65 APY and that too, with unlimited free ATM withdrawals across the states. With access to over 3000 ATMs, savings accounts holders receive 1.65 percent APY after a minimum deposit of $50. An additional option of certificate accounts is also available with terms that range from 6 to 24 months.
Boeing Employees Credit Union: Since its inception in 1935 as the Fellowship Credit Union, Boeing Employees Credit Union has come a long way. It is the 4th largest credit union in the nation. New members at BECU get a choice between a Members Advantage Checking Account and a regular Member Share Checking Account. The former pays slightly above 4 percent APY on the first deposit of $500, and the latter provides an account that offers 0.05 percent APY. In addition to that, there is no minimum balance required, and the union charges no monthly fee.
Quorum Federal Credit Union: With a massive network of over 90 thousand ATMs, Quorum Federal Credit Union is one of the best credit unions. The joining and registration process hardly takes ten minutes. Q-Classic and Q-Choice are the two checking account options available, where the former is the more popular account because of zero service charges. People interested in savings accounts usually opt for a HighQ account that offers1.5 percent APY. No minimum balance, as well as no set deposit amount, is required to open an account.
Pentagon Federal Credit Union: Since the initial days of its establishment, the Pentagon Federal Credit Union has been the preferred choice of the members of the armed forces and employees from various government departments. Its merger with the Progressive Credit Union allowed PenFed to open its gates for all citizens. With a minimum deposit of $5, its online savings account offers an APY of 1.6 percent. If one is willing to invest a sum of $1,000, one can hope for higher yields from money market certificate accounts.
Also Read – When should you buy a Shelf Corporation?
Buying Shelf Corporations with Credit Facilities- a viable option
If you want to have an edge over your competitors, then you should consider purchasing a shelf company for sale. Buying a shelf company can offer greater credibility to your business. For example, suppose you are starting a business. You decide to purchase a Wyoming shelf corporation that is almost five years old. Doing so allows you to advertise that you have been in business for five years. Now, when a potential customer looks up your company, they will discover the date and the year of establishment of your company. It will seem to them that you have been in the trade for an extended period, enhancing your credibility further. Therefore, acquiring shelf corporations with bank accounts can give a substantial financial boost to your business.
But again, age is not the only factor to be considered while you are thinking about business credibility. Registering your shelf corporation with a credit union is a great way to ensure that you have access to a line of credit. Some wise decisions at the right time can see your Paydex score increase and prove highly beneficial. So be smart and take benefit from the reliable California shelf corporations for sale in the market!
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