Should you Finance with a Credit Union?

Opening a new, independent pharmacy can be exciting. Reinventing your current pharmacy can be equally thrilling. However, the time and energy – and cash – these projects require can be intimidating.

If you’re looking for a boost, a pharmacy loan could prompt growth or provide financial reprieve. But should you go with a bank or a credit union, and what’s the difference?

Today’s banks and credit unions have fewer differences than in the past, especially if you choose a credit union that has up-to-date online services and takes part in a co-op that provides access to branches and ATMS nationwide. The most significant difference between them is that banks are for profit, which means they’re either privately owned or publicly traded. Credit unions are nonprofit institutions. This divide is the reason for the discrepancies between the products and services each of them offer.


Anyone can open an account with a bank. Customers, though, do not have a say in how a bank is run like they do with a credit union. At a credit union, you’re a member. But at a bank, you’re a customer.

Banks are open to anyone interested in an account or loan, so long as the customer has a good banking history. There are also more branches and ATMs available with a bank, making it easier to access money in your city, state, and nationwide.

When it comes to financial technology, the large banks surpass credit unions because they have more money to spend. As for-profit institutions, they also have the funds to invest in things like mobile-banking apps, a must-have in today’s world.

Banks tend to have higher fees than credit unions. Free checking accounts usually come with stipulations, such as minimum account balances or requirements for additional types of accounts. Error fees for such things as overdrafts or bounced checks tend to be higher at banks, too.

Credit Unions

Not just anyone can open an account with a credit union. This is because the customer base in a credit union is limited to what they call a “field of membership.” This means their customers are members of either a school, place of worship, a company where people work, a certain geographic area, or a specific organization. However, some credit unions are more lenient toward membership regardless of those factors. While the membership requirements often deter small business owners from using a credit union, the low rates, strong membership relationships, and flexible repayment terms make them worth taking a second look.

Credit Unions are known for their superior customer service, and they provide their members with important financial education as part of their services. They also accept deposits, make loans, and provide a wide variety of other financial services just like banks do.

While not insured by the Federal Deposit Insurance Corporation (FDIC) like banks, all federal (and most state) credit unions are insured by the National Credit Union Administration (NCUA). Like FDIC, NCUA insurance guarantees up to $250,000 per share owner, per insured credit union, for each account ownership category, should the credit union close or go into conservatorship

Pros of credit union business loans:

Lower interest rates on loans and credit cards

Since credit unions are non-profits with lower overhead costs than banks, they’re able to pass on cost savings to consumers through competitively priced loan and deposit products. 

Fewer and lower fees

Many credit unions out there offer checking accounts with no minimum balance and no monthly service charges. And depending on the credit union, the fees for banking errors may also be lower than a bank.

Insured deposits

98 percent of credit unions in the U.S. are insured by the Federal National Credit Union Administration (NCUA). This provides the same protections that the FDIC provides to banks.

Nationwide ATM access

Most credit unions have a limited number of branches, but being a member grants you access to a nationwide network of thousands of surcharge-free ATMS.

Mobile apps and online banking

It’s been said that banks can offer services – like online banking – that credit unions can’t. However, credit unions have caught up with technology and members can now enjoy easy-to-use online banking and bill-pay services, along with mobile banking.

Cons of credit union business loans:

Membership requirements

While some membership requirements are pretty lenient, other credit unions are restricted to specific groups of people or geographic regions.

Fewer branches and ATM locations

National banks have locations on nearly every corner. Credit unions don’t. However, the need for physical branches and ATMs has waned thanks to online banking and the shift to digital means of payment. However, many credit unions are part of a co-op and ATM network, allowing you to complete your banking at another member organization.

Fewer products and services offered

Because banks are for-profit, they’re focused on generating growth and profits for its shareholders. However, the focus is much different for credit unions. The heart of their work is serving their member-owners, and without overt consideration to growth or profits. Because of this, they’re not interested in continuous development of new products or services. Their desire is to offer the products and services that are most important to their customers and to do it well.

The bottom line is this: Credit unions are more likely to offer you lower-cost services and better options on interest rates for deposits and loans. On the other hand, banks may provide more advanced technologies and a few more services and products. It’s factors like these that you’ll need to consider when deciding which institution will best suit your pharmacy project’s needs.


A Member-Owned Company Serving Independent Pharmacies

PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy-side of their business. Founded and owned by pharmacists, PBA Health serves independent pharmacies with group purchasing services, wholesaler contract negotiations, proprietary purchasing tools, and more.

An HDA member, PBA Health operates its own NABP-accredited secondary wholesaler with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products — offering the lowest prices in the secondary market.

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Elements is written and produced by PBA Health, a buy-side solutions company.

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