Finances & Fundraising
Why Startups Should Never Use Credit Unions (and What to Use Instead)

Why Startups Should Never Use Credit Unions (and What to Use Instead)

Written by 
Pilot Team
February 13, 2019
Why Startups Should Never Use Credit Unions (and What to Use Instead)

At Pilot, we do bookkeeping for a lot of startups. So much so, that we have a recommended financial stack for these fast growing companies. When it comes to banking institutions, we’ve seen it all. The result?

We believe no self-loving startup should ever use a credit union.

Here, we’ll explain why credit unions are no good for startups and what are the best banks for startups.

At Pilot, we have a team of expert bookkeepers using powerful software to eliminate the most error-prone aspects of bookkeeping. If you want to keep better books, Try Pilot Now.

3 Reasons Credit Unions Hurt Startups

Startup life never lets up. If you’re managing a rapidly growing company, the last thing you want to be worried about is your bank account. Unfortunately, most credit unions just aren’t designed to handle the needs of a quickly scaling business.

Reason #1: It Can Be a Security Risk

Most credit unions only allow login information for one person: the business owner. If you’re a bootstrapped startup with a jack-of-all-trades founder, that can work — initially.

But as soon as you’re ready to delegate bookkeeping services and accounting to someone else, you’re stuck with two bad options:

a) Give your username and password to your bookkeeper.


With a larger bank, you could create a separate login for your bookkeeper that grants “read-only” access. That means your bookkeeper can view necessary information but won’t be able to make any changes inside your account.

If you’re using a credit union, you’ll have to grant full access. Even if you use a service like LastPass to keep your password secure, there’s no way to track who performed which actions in your bank account. To the bank, it appears as if you, the account owner, is always the person making changes.

Why is that an issue? If someone makes a mistake — like sending a payment to the wrong person — there’s no way to prove who did it. It’s a vulnerability that could lead to messy legal snafus and a good deal of discomfort for both parties involved.

b) Remain at the beck and call of your bookkeeper to fetch bank statements and other info.

If you don’t think sharing direct access to your account is a good idea, that means you’re stuck handing over documents whenever your bookkeeper needs them. It’s a hassle, to say the least.

Part of scaling as a startup means finding ways to hand off trivial tasks so you can focus on strategic decisions and revenue-generating activities. Rooting through your account for basic financial information doesn’t make the cut.

Reason #2: Poor UI Makes Business Bookkeeping Difficult

Credit unions don’t design their user interfaces with growing startups in mind. They’re primarily made and marketed to individuals for personal use.

Even simple tasks like downloading transactions may be tricky — if not impossible. With many credit unions, you might have to download the statement, then splice together the information you need.

Plus, a dearth of robust integrations means you can’t usually get data from your credit union into your tool of choice without manual effort.

That means either you or your designated bookkeeper are going to have a difficult time managing your books. And it also results in the third reason we believe startups shouldn’t use credit unions: errors.

Reason #3: Bookkeeping Errors Are More Likely

Are we seriously suggesting your books are less likely to be accurate if you use a credit union? Yes. Yes, we are.

Why? Most credit unions don’t play nice with other tools. Their integrations are weak (or nonexistent), which means your bookkeeper has to find everything by hand. It’s often not in the right format (as discussed above), which means more of the work has to be done, again, by hand.

When it’s harder to put together needed information and share it with other tools, it’s easier to make mistakes. It’s also harder to find existing mistakes. That means you’re more likely to have bookkeeping errors if you use a credit union.

The Best Bank for Startups: What Should You Use Instead?

Most banks are better options than a credit union. You can set up multiple users, integrate with tools like QuickBooks, and find the information you need more quickly.

But if we had to pick just one bank to recommend to startups, it’s Silicon Valley Bank (SVB). And no, that’s not an affiliate link. We recommend them because so many of our clients have had a positive experience and because their options for growing startups are better than most.

If SVB isn’t an option for you, we also recommend Chase and First Republic. Many of our clients have had a positive experience with those banks as well.

What’s Great About SVB

During our time working closely with startups, we've come to believe that Silicon Valley Bank is the best bank for startups.

In addition to not having the problems a credit union does, SVB is a step above many other banks because it’s specifically designed for growing startups. Information is easy to find and integrate with commonly used tools.

As far as pricing is concerned, startups get three years free on the SVB StartUp plan. When your startup grows into a larger company, there are a series of plans with increased access to services and features that growing companies need.

As far as features are concerned, SVB has startup-friendly options like sweep accounts. Account owners can set a desired threshold, then anything over that amount is automatically removed and invested. As your company grows, so do options for payment automation, mobile tools, and fraud prevention.

Thoughtful features like the ability to invest without spending time and brain power on it are what make SVB so useful for startups.


Even if you feel a credit union works for you now, it won’t keep working for you if you’re scaling your company. Switching banks down the road isn’t pretty — many business owners end up leaving multiple accounts open as they progressively need more sophisticated banking solutions.

Leaving a trail of bank accounts behind you isn’t a great idea, either. It leaves you vulnerable to bookkeeping errors and adds more complexity to your financial activity.

If you haven’t chosen your banking institution yet, it will save you a lot of trouble to pick one that can handle your business growth. And if you have, well … this information is something to keep in mind for next time.

At Pilot, we have a team of expert bookkeepers using powerful software to eliminate the most error-prone aspects of bookkeeping. If you want to keep better books, Try Pilot Now.

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Suggested Reading

5 Tips for Fundraising in a Downturn

What Is a Fractional CFO and Do I Need One?

Annual Budgeting Guide for Startups

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