Selecting the Perfect Financial Ally: Credit Unions vs. Banks

5-minute read | Jan 4, 2024

Successfully running a home improvement contracting business requires more than quality construction services. It involves hiring and retaining the right talent, partnering with like-minded vendors, and finding the appropriate financial institution to work with. However, with an overwhelming number of credit unions, banks, and fintechs, finding the ideal financial partner can be daunting.

We recommend starting by identifying your business needs to make the process manageable. Questions like whether the financial institution offers contractor customer financing, specific loans or lines of credit to manage business expenses, funding for equipment or business projects, and products to manage cash flow can help you narrow down your options. After answering these questions, you will find that your list of potential financial partners is significantly smaller.

You can further narrow down your selection of a financial partner by deciding if you would like to work with a credit union or a bank. While both financial institutions can provide the services you need, there are several differences between the two that may affect their financing programs. Keep reading to learn more about the differences between credit unions vs banks.

Ownership and Governance:

  • Credit Unions are not-for-profit organizations that their members own. Each member is a shareholder with a say in the credit union’s governance through an elected Board of Directors.
  • Banks are for-profit institutions owned by shareholders and are typically governed by a board of directors selected by the shareholders.

Profit Orientation:

  • Credit Unions return profits to their members through lower fees, better interest rates, and improved services.
  • Banks distribute their profits to their shareholders and may often have higher loan fees and interest rates than credit unions.

Eligibility and Membership:

  • Credit Unions have membership requirements based on commonalities among their members, like being part of a specific community, organization, or workplace.
  • Banks are generally open to anyone without specific membership requirements.

Loan Terms and Interest Rates:

  • Credit Unions may offer more favorable loan terms and lower interest rates on contractor financing programs because of their not-for-profit status.
  • Banks may have higher rates and fees but could offer more diverse loan products.

Customer Service and Relationships:

  • Credit Unions are often smaller and more community-oriented, potentially offering more personalized service and building stronger relationships with their members, including those seeking contractor financing.
  • Banks are typically larger and may not provide the same level of personal attention, but they often have more extensive online services and technology platforms.


  • Credit Unions are typically regulated by state and federal agencies, like the National Credit Union Administration (NCUA), Federal Reserve, and must adhere to strict financial stability and customer service standards.
  • Banks are regulated by various federal agencies, such as the Federal Reserve, the OCC, and the Federal Deposit Insurance Corporation (FDIC).

Financial Products:

  • Credit Unions may have a more limited range of financial products than banks. Still, they can tailor their offerings to the specific needs of their member base, which may include contractor financing options.
  • Banks typically have a broader array of financial products, including various financing options for contractors, from small business loans to lines of credit.

Size and Reach:

  • Credit Unions often have fewer branches and ATMs, which can be a consideration for contractors who travel frequently and need physical access to their financial institution.
  • Banks usually have more extensive networks of branches and ATMs and a broader presence both domestically and internationally.


When choosing between credit unions vs banks for contractor financing, it’s essential to consider these differences and determine which institution meets your specific needs regarding service, cost, accessibility, and the specific terms of their contractor financing programs.

Are you ready to partner with a financial institution invested in your contracting business’s success?

Partner Forward with Salal Credit Union

Headquartered in Seattle and with five business lines to serve our community and members, Salal Credit Union has been helping members thrive for over 70 years. From Dealer Direct Lending and Business Services to Home Lending, Personal Banking, and Investment Services*, our wide variety of products are tailored to meet the specific needs of your contracting business and customers.

Through our Dealer Direct contractor financing program, we team up with home improvement businesses nationwide to provide their customers with affordable financing for various solar and home improvement projects.

Since 2009, we’ve financed over 60,000 solar and home improvement projects for our member-owners through our Dealer Direct contractor financing program.

We can offer some of the most competitive rates and dealer fees because we’re part of a member-owned credit union. That means our profits return to our members—and business partners—through lower rates and fewer fees.

Our Dealer Direct Financing programs feature:

  • An online loan application with fast credit decisions and a high approval rate.
  • Terms and loan amounts are available to fit various budgets and project sizes.
  • Partners pay ZERO dealer fees on our standard program.

How to Start Offering Salal Dealer Financing to Customers

We’re serious about helping your business grow with fast funding times and personalized support from a dedicated and experienced team of lending specialists. To get started, our dealer application process requires these documents:

  • Completed dealer questionnaire
  • Current income statement and balance sheet
  • Copy of business license and/or contractor’s license

Learn more about becoming a Salal Dealer Direct Partner.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (member FINRA / SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The credit union has contracted with CFS to make non-deposit investment products and services available to credit union members, tied to “Investment Services.” This communication is strictly intended for individuals residing in the state(s) of CA, IL, IA, MN, NV, OH, OR, VA, and WA. No offers may be made or accepted from any resident outside the specific states referenced.

Disclosure: Salal does not provide legal advice. Businesses should contact their own legal representative for any questions.


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