Credit union business lending

A buyer financing a purchase may be offered a loan by a credit union instead of, or alongside, a bank. The Ontario and British Columbia Acts below both tie credit unions to their members, so ask about membership. This entry covers Ontario and British Columbia; check the rules where you are.

Ontario

The Credit Unions and Caisses Populaires Act, 2020 defines a credit union as a corporation incorporated or continued as one under that Act or a predecessor. Subject to the Act, section 138 limits its business to listed activities, starting with providing financial services primarily to its members, depositors, subsidiaries and affiliates. The regulator is the Financial Services Regulatory Authority of Ontario.

British Columbia

Under section 41 of the Credit Union Incorporation Act, a credit union may admit as a member only persons, and unincorporated associations, eligible under that section, such as a person in a group its common bond of membership, if any, is meant to serve whose application is approved and who pays for the minimum membership shares its rules require. The regulator is the BC Financial Services Authority.

What to ask

• Whether the borrower must join, and what membership requires
• What security the credit union will want, such as a general security agreement
• Whether it would lend alongside a bank or BDC, and how the lenders would share security

For the wider picture, see how to get a loan to buy a business.