Bank of America Small Business Loans Review


What is Bank of America?

Bank of America Corp. dates back to 1804, when Nantucket Pacific Bank, the company’s oldest heritage bank, was founded. Today, after many acquisitions, Bank of America has grown to become the nation’s second-largest bank with $1.79 trillion in assets as of the first quarter of 2018. The bank serves around 47 million consumers and small businesses, has approximately 4,400 retail financial centers and 16,000 ATMs. Small business banking is part of Bank of America’s consumer banking division.


Lender highlights

As a traditional bank lender, Bank of America’s lending criteria is typically more stringent, making it harder for small businesses with borderline credit to get loans or lines of credit from the bank.

It also originates fewer loans backed by the U.S. Small Business Administration than its major competitors. For example, as of March 2018, TD Bank approved 2,206 SBA loans; Wells Fargo approved 1,848; and Chase approved 1,307. In that same period, Bank of America approved only 111.

For most small business loans, Bank of America still requires small business owners to schedule a call or branch appointment to apply. If you prefer face-to-face banking relationships, this model might work for your small business.

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What does Bank of America offer?

It can be challenging to get a loan at a bank that uses the traditional 5 C’s of credit criteria: capacity, capital, collateral, conditions and character. But there are multiple options for those who qualify. The most qualified small business borrowers can expect APRs as low as 3.29 percent. Bank of America offers larger loan amounts of $100,000 or higher along with numerous smaller loan options. For most loans, borrowers have tremendous flexibility in how they use the funds for their businesses.

Bank of America Business Loans: At a glance
Loan product Loan amount Loan term APR range/ factor rate Fees Time to funding
Unsecured Term Loan $10,000-$100,00 12-60 months As low as 5.50% $150 As soon as 5 business days from approval
Unsecured Line of Credit $10,000-$100,00 Revolving with annual renewal As low as 6.25% $150 As soon as 10 business days from approval
Secured Term Loan From $25,000 Up to 5 years* As low as 4.50% 0.5% of amount financed As soon as possible after approval
Secured Line of Credit ☨ From $25,000 Revolving with annual renewal As low as 5.25% Varies depending on amount ** As soon as possible after approval
Auto Loan From $10,000 48-72 months As low as 3.29% None Upon approval, check payable to dealer/seller

Rates current as of 6/26/2018

Loan product Loan amount Loan term APR range/ factor rate Fees Time to funding
Equipment Loans From $25,000 Up to 5 years 4.50% 0.5% of amount financed As soon as 10 business days from approval
Commercial RE Loans *** From $25,000 Up to 15 years✝ 5.00% 0.75% of amount financed As soon as two days after approval for highly qualified applicants.
SBA Loans1 $350,000-$3.5 million Up to 25 years Varies based on business applicant Varies based on business applicant Varies based on business applicant
Healthcare Practice Loans Up to $5 million Varies based on financing Varies based on business applicant Varies based on business applicant Varies based on business applicant

Rates current as of 6/25/2018

* Up to four years for loans secured by business assets; up to five years for loans secured by a certificate of deposit.
** $150 for up to $100,000; $250 for $100,000 to $250,000; and 0.5 percent of the line amount for amounts above $250,000.
*** Borrowers can use commercial property to secure lines of credit.
✝ Up to 10 years with balloon payment; up to 15 years with full amortization.
☨ When offered, secured loans available for up to $2.5 million.


Eligibility requirements

This chart provides an overview of basic lending requirements, but Donald J. (Don) Vecchiarello, Jr., SVP, communications manager – consumer products and small business, Bank of America Corporate Communications said, “To help present your business in the best possible light, you should make sure you’re maintaining a good credit score, borrowing only what you know you can pay back, presenting a repayment plan that’s complete with projections and a safety net, showing a history of paying bills on time and providing collateral.”

1.Bank of America offers SBA 7(a) and 504 loans. The 7(a), SBA’s most popular, allows borrowing between $350,000 to $3.5 million. It’s for working capital, purchasing inventory, refinancing debt and/or business acquisition or expansion. Borrowing terms are up to seven years for working capital; up to 10 years for purchases; up to 25 years for real estate.

The Bank of America SBA 504 loan is to purchase equipment, purchase commercial real estate and to fund construction or renovation. Loans are available starting at $350,000. Borrowing terms are 7-10 years on equipment, 10-20 years on real estate and an up to 2-year construction period.

Loan product Annual revenue Min. Business Score or Personal Credit Score Time in business
Business Advantage Unsecured Term Loan $100,000 Not disclosed Min. 2 years under current ownership
Business Advantage Unsecured Line of Credit $100,000 Not disclosed Min. 2 years under current ownership
Business Advantage Secured Term Loan $250,000 Call or visit Min. 2 years under current ownership
Business Advantage Secured Line of Credit ☨ $250,000 Not disclosed Min. 2 years under current ownership
Business Advantage Auto Loan Min. vehicle value of $10,000; max. vehicle age of five years; less than 75,000 mile. Call or visit Not disclosed
Equipment Loans $250,000 Call or visit Min. 2 years under current ownership
Commercial Real Estate Loans $250,000 Call or visit Min. 2 years under current ownership
SBA Loans* Varies Call or Visit New and existing businesses
Practices Solutions: Loans for Healthcare Providers Varies Call or Visit Varies by practice type

* From Bank of America website: “Benefit from easier qualification, longer terms and lower down payments on fixed assets than most standard loans.”

Additional eligibility factors

Bank of America uses well-established industry criteria to evaluate the creditworthiness of small businesses. That includes FICO credit scores, business credit reports, personal and business financial documents and potentially a business plan. Under federal law, borrowers must identify all beneficial owners for verification.

There can be many paperwork requirements, particularly if you borrow more and for certain loan types such as SBA loans. Strong business record keeping is essential. All this makes it harder for small business owners who can’t meet traditional lending criteria or who haven’t been in business long.

A Bank of America spokesman said that the bank uses traditional criteria to assess borrowers and each application is evaluated on an individual basis. Many factors are taken into account when qualifying candidates, but generally strong Bank of America candidates tend to have the following characteristics:

  • Been in business for a few years
  • Strong business track record
  • Enough cash flow to support debt
  • Collateral or other secondary source of repayment
  • Solid capital position

If your business closely fits these criteria, which are those most traditional lenders follow, you should consider alternative sources of financing.

Businesses that are not eligible or Bank of America loans

The bank requires small businesses to be under current ownership for at least two years for many of its loans and lines of credit. The bank directs startup businesses to SBA loans. Similarly, businesses with poorer credit histories might have a hard time qualifying for a loan or line of credit because Bank of America is a traditional lender. The bank encourages potential borrowers to get in contact with its business lending specialists to discuss eligibility for financing.


How to apply for Bank of America small business financing

For unsecured term loans and lines of credit, there’s an online application. Depending on your loan type, you might have to submit documents by email. All other borrowers must apply by phone or in person, as indicated on the website.

Documents needed to apply

For all business loans, Bank of America requires the following information:

  • Name
  • Physical street address of business (no P.O. boxes) and date moved to current address
  • Phone number
  • Tax ID number
  • Nature of business
  • Date the business was established
  • Business acquisition date of current ownership
  • Number of employees
  • Annual net profit
  • Annual gross sales
  • List of outstanding obligations, if any (list should include lender, current loan balance or credit limit, and monthly payment)

Bank of America also requires the following information about each business owner, guarantor and controlling manager:

  • Name and title of the person opening the account
  • Name and address of the entity for the account
  • Name, date of birth, Social Security number (for U.S.citizens) or passport number and country of issuance (for foreign individuals), residential address, country of citizenship, country of residence and percentage of ownership for each beneficial owner
  • Name, date of birth, Social Security number (for U.S.citizens) or passport number and country of issuance (for foreign individuals), residential address, country of citizenship and country of residence for each controlling individual (this information is required even if no equity owner has 25 percent or greater ownership)
  • Certification that the information provided on the beneficial owner and/or the controlling manager is accurate
  • Personal income
  • Residence status (rent or own) and monthly housing payment

When necessary, the bank might ask for additional information about the equipment, vehicle or property that borrowers intend to finance.

It’s important to know that loans (and some leases) might require you to auto-debit your payments from a Bank of America business checking account if you have one. You aren’t required to have a business checking account when you apply, but if you’re approved, Bank of America will help you open one before the loan closes.


Pros/cons

Pros Cons
  Multiple, flexible options for lines of credit and loans   Stringent lending criteria requires strong credit profile
  Loans and lines start as low as $10,000.   Maximum loan amounts $100,000 for unsecured loans and lines
  Low interest rates for well-qualified borrowers   Difficult for credit-challenged business owners to get financed.
  Several medical practice loans available; dental residents can get funded   Financing unavailable for medical and veterinary residents
  Available in all 50 states   Some suburbs and most rural areas don’t have branches

Who is the best fit?

Bank of America focuses on the most creditworthy consumers, including small businesses. Businesses that can meet the bank’s credit criteria, including its substantial documentation requirements, are the best fits for these loans. The bank also makes relatively few SBA loans annually compared with banks of a similar size, so you might want to go with a bank that originates more of these types of loans if that’s important to you.


Fine print

You can apply online only for unsecured loans and lines of credit if you already have a small business Bank of America account and login. Otherwise, you must apply in person or over the phone. You don’t need an account with the bank when you apply. But, for the bank to fund and administer your loans and lines of credit, it requires you to open a checking account. Moreover, you can get discounts on some lines of credit and loans through the bank’s Business Advantage Relationship Rewards, but only if you have an open account.


The bottom line: How Bank of America stacks up

Bank of America’s lending programs are robust, especially for creditworthy small businesses. Ther bank offers many loan options and uses human underwriters, so it considers each business individually before extending credit. It doesn’t extend much SBA credit, however, which is available to those who wouldn’t otherwise qualify.

Like with any lender, small business owners should research their options at other institutions before committing to a Bank of America loan. If you do consider a Bank of America loan your best option, ask many questions, evaluate the terms of the loan and consider the lender’s experience by using a tool like the Small Business Borrowers’ Bill of Rights.

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