Bank of America Business Loans Review

Pros and cons of Bank of America

Bank of America small business loans review

Bank of America is a traditional bank lender offering a diverse selection of business products, merchant solutions and resources to help business owners grow and succeed. With nearly 4,000 branches nationwide, this bank could be a good fit if your business needs extra in-person support or additional services, like access to local networking opportunities or safe deposit boxes. Small business financing options include term loans, lines of credit, auto loans, equipment financing, SBA loans and more. Bank of America’s rates are considered competitive, with minimum rates listed for almost all products.

Most lending products are geared toward well-established companies with at least two years of business history, although early-stage startups can apply for a cash-secured line of credit after only six months in business. Getting a startup business loan with Bank of America could help boost your business credit profile, helping you qualify for more funding down the road.

In addition, there are a range of opportunities and perks available for underserved members, such as the Bank of America Center for Women Entrepreneurs and rate discounts for veteran business owners. Business members can also enjoy cashback bonuses and discounts via Bank of America’s Preferred Rewards for business program.

Bank of America small business financing at a glance

Preferred Rewards tiers by product

If you’re a Preferred Rewards member, you may be eligible for interest rate discounts. You’ll need a Bank of America business checking account to qualify, which you can open during the loan application process.

Preferred Rewards Member Tiers

Unsecured term loans

Bank of America’s Business Advantage unsecured term loan could be a great choice for those who can’t provide collateral. Funds start at $10,000 and can be used for a range of business expenses, such as inventory, expansions, energy efficient equipment and more. Fixed interest rates go as low as 6.50%, with an origination fee of $150, and terms last between 12 and 60 months.

Secured term loans

Secured term loans require collateral, but interest rates are typically lower than unsecured products — starting at 6.00%. The minimum loan amount is $25,000, with terms lasting up to 48 months if you secure your loan with business assets, or up to 60 months if you secure your loan with CDs. There’s also an origination fee of 0.50%.

Veterans can qualify for a 25% reduction on origination fees — to claim the discount, you’ll need to provide proof of your service.

Unsecured line of credit

With a business line of credit, you can borrow up to your credit limit as often as needed — only paying interest on the withdrawn amounts. You can use the funds for ongoing or occasional expenses, such as hiring new staff or seasonal dips in revenue. Bank of America’s Business Advantage credit line starts at $10,000, with rates as low as 9.50%.

Secured line of credit

While secured business lines of credit can unlock lower interest rates, you need to secure them with a blanket lien on your assets or a certificate of deposit (CD). Credit lines start at $25,000, with interest rates as low as 9.00%.

Bank of America charges the following fees for secured lines of credit:

• For amounts up to $100,000: $150 upfront and annual review fee
• $100,000.01 to $250,000: $250 upfront and annual review fee
• $250,000.01 and up: 0.50% of the credit limit

Cash-secured line of credit

A cash-secured line of credit from Bank of America can help companies establish and build business credit, which can help you qualify for future funding. This option can be ideal for early-stage startups or those with poor or limited credit.

You’ll need to provide at least a $1,000 security deposit to open the account. When you draw against your line of credit, you’ll repay with a variable interest rate. There are no origination fees, but a $150 annual fee (waived the first year) and a 3% international transaction fee apply. Note that late fees range from $0 to $49, depending on your balance.

Bank of America will review your line of credit after 12 months. If you’ve managed your line of credit responsibly and meet other business qualifications, you may be able to upgrade to an unsecured line of credit.

Business auto loan

You can borrow $10,000 or more to purchase or refinance a vehicle with a Bank of America business auto loan. Terms range from 48 to 72 months, with fixed rates starting at 6.29% APR.

The vehicle must meet the following requirements to be eligible for financing:

• Weight under 2.5 tons
• Have less than 75,000 miles
• Be valued at least $10,000
• No more than five years old

You can talk to a Bank of America specialist to discuss other options, such as vehicle leasing.

Equipment financing

Vehicles weighing over 2.5 tons and other types of equipment can be financed through Bank of America’s equipment financing loans. Loans start at $25,000 with terms between 12 and 60 months. Interest rates start at 6.25%, plus a 0.50% origination fee.

Commercial real estate loans

Bank of America’s commercial real estate loans start at $25,000 and can be used to purchase land or commercial property, or to leverage equity to expand your business. Rates start at 5.50%, plus a 0.75% upfront fee, with the potential for other fees and closing costs.

Loan terms go up to 180 months if you make fixed payments, or just 120 months if you choose a loan with a balloon payment. Balloon payments are usually undesirable — you’ll have one large payment at the end of your loan term. However, it could be worth it if you’re able to plan ahead and are willing to take on the risk.

SBA 7(a) loans

Bank of America offers SBA 7(a) loans from $200,000 to $5,000,000, with terms up to 300 months. The Small Business Administration sets the maximum interest rates for SBA loans, making them an affordable option for businesses that may struggle to secure traditional financing.

The SBA typically charges financial institutions a guaranty fee (or upfront fee), which may be passed on to the borrower. However, the SBA and some financial institutions will waive these fees for certain businesses. Check with your financial advisor to see if you’re eligible.

As an SBA-preferred lender, Bank of America can typically approve and fund your SBA loan in around two weeks, compared to the average turnaround time of 30 to 90 days. The SBA takes two to 10 days to approve 7(a) loans, but that doesn’t include the time it takes for the lender to approve the loan, which can add a significant amount of waiting time.

SBA Express loans

SBA Express loans are similar to SBA 7(a) loans, except with smaller loan amounts and faster turnaround times. While standard SBA 7(a) loan applications can take five to 10 business days for the SBA to review, SBA Express loans take a maximum of 36 hours – but that doesn’t include the time it takes Bank of America to process and approve the application. The bank doesn’t disclose its processing time, so if you need a loan quickly, talk with a loan agent before applying.

At Bank of America, you can borrow between $25,000 and $500,000 with an SBA Express loan. Rates can’t exceed the SBA maximum, and Bank of America may pass any extra fees (like the guaranty fee) to the borrower.

SBA 504/CDC loans

SBA 504 loans are often issued for real estate, machinery or equipment, with a maximum term of 300 months. Loan amounts start at $400,000, with SBA down payments as low as 10%. You may need to also pay an SBA guaranty or upfront fee.

Health care practice loans

Bank of America has a specialized department for health care practice financing, including up to $5,000,000 in financing for dentists, physicians, optometrists and veterinarians. Suggested uses for financing include starting a new practice, acquiring a practice, expanding your practice and consolidating debt.

Franchise financing

Bank of America also provides financing for restaurant franchises, with loan amounts starting at $10,000. There’s even a dedicated team specifically for McDonald’s franchise financing.

Bank of America borrower requirements

Bank of America’s business loan requirements vary by product. The easiest product to get is the cash-secured line of credit, which requires the least amount of business history and revenue. All other products require at least two years of business history with minimum annual revenue requirements of at least $100,000.

Bank of America doesn’t publicly share minimum credit score requirements for all of its business lending products. However, if you’re getting an unsecured loan or line of credit, you will need a credit score of at least 700.

Be aware that unless you have an excellent credit score, it’s likely the interest rate you’re offered will be higher than the advertised starting interest rates. Check out LendingTree Spring to help you monitor and improve your credit score.

Required documents

When you apply for a business loan with the Bank of America, you and other business owners can expect to provide the following info and documents about your company:

• Business name and address
• Business phone number
• Business tax ID or Employer Identification Number (EIN)
• Industry and business start date
• Date of acquisition (if applicable)
• Number of employees
• Annual net profit
• Annual gross sales
• Business’ outstanding debts, including lender name, account balance and monthly payment amount
• Personal information for all owners/guarantors/controlling managers:
• Name and title, date of birth and Social Security or passport number
• Personal income
• Monthly housing payments

Gathering all required paperwork in advance can speed along the loan application process, helping you access your funds faster.

Alternatives to Bank of America

Even though it only lists starting rates and amounts for most products, Bank of America is still more transparent than other large, traditional financial institutions. If you’re trying to figure out which bank has the most competitive rates, the best way to find out is to fill out applications at multiple financial institutions.

Bank of America vs. KeyBank

KeyBank could be a great choice for those wanting to explore an extensive range of SBA options, such as SBA International Trade Loans or Working Capital CAPlines — products not offered by Bank of America. As an SBA Preferred Lender, KeyBank can likely process and fund your loan quicker than the average SBA turnaround time. However, KeyBank’s SBA products are only offered in 17 states, although its conventional products are more widely available. In comparison, Bank of America’s SBA products appear to be offered nationwide.

Businesses need to operate for a minimum of three years to qualify for business financing with KeyBank, whereas early-stage startups have more options with Bank of America. At first glance, KeyBank offers higher funding amounts, such as up to $12,000,000 with its SBA 504/CDC loan. That said, Bank of America doesn’t publicly disclose maximums for all of its products.

Unlike Bank of America, KeyBank doesn’t list any details regarding its business loan interest rates. While it could offer competitive rates, you won’t know for sure until you submit an application.

Bank of America vs. PNC

PNC is another traditional bank offering a wide selection of conventional and SBA loans for businesses of all sizes. Like Bank of America, PNC requires a minimum of two years in business to qualify for most products, although they may be able to offer creative funding solutions for startups.

Bank of America’s small business loans have lower minimum borrowing amounts, with both banks having the same $5,000,000 maximum for the SBA 7(a) loan. PNC doesn’t publicly disclose its rates and fees, so you’ll need to apply to both banks to find out which one is right for you.

Keep in mind that you may be eligible for interest-rate deductions with Bank of America’s Preferred Rewards program, whereas PNC only offers rewards for its business credit card.