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Credit Union Direct Lending: An Option For Your Business

Reviewed by Ty Crandall

June 14, 2024


Credit Union Direct Lending: An Option For Your Business

Banks aren’t opening their vaults as easily for businesses these days as they have in the past. Many business owners are finding it necessary to get creative when it comes to business funding.  In many cases, credit unions are seizing the opportunity to step in and fill the gap.

Credit Union Direct Lending Works Well for Some Businesses, Is Yours One of Them?

In fact, back in 2018, Member Business Lending (MBL), partnered with CU Direct to help this process along. MBL is the leading credit union service provider when it comes to business loan origination services.  CU Direct, well known for the CUDL (Credit Union Direct Lending) system, works with thousands of auto dealerships to help facilitate auto-financing through credit unions.

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Together, the two are able to streamline the credit union business loan processes.  It’s a good thing too, because more and more businesses are looking to credit unions to get the funding they need since banks aren’t coughing it up.

So, is credit union direct lending right for your business? Let’s find out.

What Does it Take to Qualify for Business Loan From a Credit Union?

While all lenders have their own requirements, it’s a fair bet you are going to need to provide the following to any lender.

  • Loan application formcredit union direct lending Credit Suite
  • Personal financial statement
  • Business plan
  • At least three years of financial statements and tax returns for existing businesses

Most lenders will be looking for the following:

  • Regular income sufficient to repay the loan along and stay solvent
  • A good credit history
  • Collateral
  • Financials in line with or exceeding peers.
  • Owner equity in the business.

If you cannot provide all of the information, it could go a couple of ways. They could automatically deny the loan. However, some credit unions are willing to review the information provided.

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Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

A complete loan application will typically include:

  • Current financial statements to within 3 months, and three years of past financial statements and tax returns
  • Personal financial statements from all principals of the business
  • A description of the collateral or purchase receipts or quotes if the loan is for new equipment
  • Projections on a month by month basis for up to two years, or the length of the loan if less than 2 years
  • A complete, professional business plan
  • Authorization for loan request from Board of Directors or partners
  • Personal guarantee

It’s important to note that personal credit score is handled differently by each institution when it comes to credit union business loans. It’s a fair bet that if they are asking for a personal guarantee, they are going to want to see a strong personal credit score.

However, we have heard from at least one credit union that this is not always the case. This particular credit union does not have a standard minimum credit score requirement.  They say they take each loan application on a case by case basis.

So, even if you do not have a great personal credit score, if you are strong in the other areas you may still qualify for a business loan from a credit union.  You just have to find the right lender.

Why Can Loans from a Credit Union be a Good Option?

So, why would you pursue a loan from a credit union over a loan at a bank?  In short, lower interest rates and fees. Credit unions are cooperative, non-profit organizations.  As such, they do not pay federal and state income taxes. So, they are able to pass the savings on in the form of lower rates and fees.

Due to a difference in structure and loan application review processes, credit unions are also often able to process loans much more quickly than banks.

Get Credit Line Hybrid Financing from Credit Suite

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

What if Loans from a Credit Union Are Not an Option?

At this point, you are likely either thinking, “I can do this!” or “What am I going to do now?”  You’ve either realized you’ve got this in the bag, or you know you need to pursue other options until you get some issues taken care of.

There are a few things you can do. If you need money right now, you can look at getting a loan from an alternative lender. Credit Suite’s Credit Line Hybrid funding may also be an option. There are a lot of funding options out there.

Whatever you do, it’s likely you need to work on your fundability while you do it. Most business loan denials result from a fundability issue. You can get a free consultation with a business credit expert to help you analyze your fundability.  They can show you what you can do to improve your chances of approval.  With strong fundability, you’ll be able to get the best deals on the business funding you need, when you need it.

About the author 

Faith Stewart

Faith has a BBA with a major in Accounting, and a combined 20 years of experience in the fields of finance and account.

Before switching to writing, she spent 10 years working in various areas of small business and personal finance and accounting, including working as a public auditor at BKD, LLP, Financial Director at Central Arkansas Development Council, and Commercial Credit Analyst at Farmer's Bank and Trust.

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