Capital One Business Loans: 2023 Review
Pros and cons of Capital One Business Loans
Several financing options available
High customer satisfaction ratings
Closing cost rebate for owner-occupied real estate loans
Slow funding times
Not transparent at all
Not an SBA preferred lender
Need to apply in person at a branch
Must have been in business for at least two years
Branch locations are sparse and mostly on the East Coast
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Capital One small business loans review
Capital One is a popular bank that exists online for the most part. It’s well-known for its credit cards but it has a robust small business lending arm, too, offering a wide range of products ranging from term loans and lines of credit to commercial real estate loans.
Who is Capital One for?
- Established small business owners. You won’t be eligible for financing (aside from SBA loans) unless you’ve been in business for at least two years.
- Small business owners on the East and Gulf coasts. You’ll need to apply in person at a Capital One branch, only available in the District of Columbia, Louisiana, Maryland, New Jersey, New York, Texas and Vermont.
- Small business owners looking for a holistic banking solution. Capital One offers a full suite of business banking products in addition to its loans. Keeping everything in-house can simplify your business finances.
Capital One small business financing at a glance
|Product||Loan amounts||Repayment term||Estimated APR range||Fees|
|Term loans||$10,000-$5,000,000||Not disclosed||Not disclosed||Origination fee: |
|SBA loans||$10,000-$5,000,000||Not disclosed||Not disclosed||Not disclosed|
|Lines of credit||$10,000-$5,000,000||Not disclosed||Not disclosed||Not disclosed|
|Equipment financing||$10,000-$5,000,000||Not disclosed||Not disclosed||Not disclosed|
|Real estate loans||$10,000-$5,000,000||Up to 240 months||Not disclosed||Not disclosed|
Capital One‘s small business term loans set the stage for its other products in that there’s almost no information available about them other than the loan amounts and origination fee. When asked to provide more details about its term loans and other small business financing products, a company representative declined. However, small business term loans can be a good option for many business needs, such as renovating your storefront, buying inventory, hiring new staff and more.
SBA loans are a type of term loan that can make for a tougher application with slower funding times, but there’s a big advantage over regular term loans: because they are guaranteed by the U.S. Small Business Administration, they tend to be a lot cheaper. SBA loans are made through a partner financial institution — funding times may be quicker with an SBA Preferred lender, which Capital One is not. Even so, if approved, you can expect to get your money in anywhere from a few days for smaller loan amounts to three months for larger loans. Capital One offers two types of SBA loans: the standard 7(a) business loan for general-purpose business needs and the SBA 504/CDC business loan for larger loans, especially for commercial real estate.
Lines of credit
Lines of credit can be handy if you know you’ll need to borrow money intermittently in the future for your business, but you’re not sure exactly when. Rather than taking out a term loan every so often, a business line of credit allows you to apply for it once and draw money from the credit line as the need arises. It allows your business to be flexible and quickly adapt to changing marketplaces.
Equipment financing is a type of secured business loan using the equipment that you’re buying as collateral for the loan. If you’ve ever taken out a car loan or leased a car, equipment financing for your business works in the exact same way. You can use it to buy manufacturing equipment, office equipment and computers and even vehicles for business use.
Real estate loans
In addition to commercial real estate financing available through the SBA 504/CDC program, Capital One also offers its own business real estate loan program. You may be able to finance up to $5,000,000 with a fixed-rate loan over a maximum term length of 240 months. You can use it to purchase a new property for your business, improve your current business property or even refinance other real estate debt.
As of October 12, 2022, Capital One is also offering a rebate against closing costs for owner-occupied real estate loans over $250,000: 1% of the loan amount, up to a maximum of $7,500. A representative from Capital One did not share for how long the rebate offer is available.
Capital One borrower requirements
|Minimum annual revenue||Minimum annual revenue 1|
|Minimum annual revenue||No minimum|
|Minimum time in business||Two years, except for SBA loans which have no minimum time-in-business requirement|
|Minimum credit score||Not disclosed|
Just like with the interest rate and repayment terms on its small business loans, Capital One is tight-lipped about what you’ll need in order to get a business loan. The only real criteria they’re clear about is that you’ll need to have been in business for at least two years, and you’ll need to have a Capital One small business checking account or at least need to be willing to open one. A representative from Capital One declined to share credit score requirements or starting interest rates, but the stronger your credit profile, the more likely you can qualify for more competitive interest rates.
Oddly enough for a mostly online bank, you must apply for its business loans in person, which is complicated by the fact that it only operates a little under 300 brick-and-mortar locations in a handful of U.S. states along the East and Gulf coasts. It’s maybe for that reason that Capital One provides discernibly few details about its products. But if you do happen to live near a branch, it’s worth scoping out to see what it can offer you.
Alternatives to Capital One
|Capital One||Wells Fargo||OnDeck|
|Minimum credit score||Not disclosed||Not disclosed||625|
|Loan products offered|| |
|Time to funding||A few business days up to three months||As soon as 10 days for unsecured credit lines, other products may take longer||As soon as same business day|
|Starting rates||Not disclosed||Prime + 1.75%||29.90% APR|
|Maximum loan size||$5,000,000||Up to $11,500,000||$250,000|
|Minimum annual revenue||No minimum||Not disclosed||$100,000|
Capital One vs. Wells Fargo
If you still prefer to do your banking in person (or at least with a large bank), consider Wells Fargo small business loans instead. It has far more of a geographical footprint than Capital One, with 16 times as many locations (4,739 in all in the U.S.) in 38 U.S. states. The only area where it’s not really available is parts of the Northeastern and Midwestern U.S. However, Wells Fargo has low rankings for customer service and the Consumer Financial Protection Bureau (CFPB) has taken several disciplinary actions against the bank.
Capital One vs. OnDeck
If you’re willing to work with an online lender, OnDeck offers a refreshingly honest and simple experience for basic business financing needs. It’s upfront with what requirements you’ll need in order to qualify, including being in business for at least a year. The downside is it’s rather expensive, and you’ll also need to make weekly or even daily payments on your loan instead of the industry-standard monthly payments.