Navy Federal Business Loan Review
Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
 | Starting APR range: 17.90% for business checking line of credit; other rates are not disclosed. Best for: Business owners who are already satisfied members of Navy Federal Credit Union. |
Pros and cons of Navy Federal Credit Union
| Pros | Cons |
|---|---|
May offer SBA loans Full-service business banking Good reputation for customer service Most loans can be used for refinancing | Doesn’t offer preapproval Lines of credit carry expensive fees Must be a business member to apply Not openly transparent with financing details Collateral required for most financing options Insurance required for most types of collateral 25% down payment required for equipment purchases May not be able to use line of credit for one month of the year |
Navy Federal Credit Union small business loans review
Navy Federal Credit Union specializes in helping military service members, veterans, Department of Defense personnel and their family members access quality banking services.
You’ll need to be a credit union member on its personal banking side before you can apply for business membership, and you’ll already need to be a business member before you can apply for a loan. Navy Federal is remarkably tight lipped about its small business loans, but given its high customer satisfaction rankings for its personal banking offerings, it could be worth it for you if you already have an account there.
Who is Navy Federal Credit Union for?
- You’re already a Navy Federal business member. Navy Federal doesn’t offer business loan preapprovals, and you can’t apply unless you’re already a member. Applying for business membership itself is a long, expensive and arduous process.
- You’re not looking for fast funding. It can take a week or more to get a credit decision, meaning you’ll need to plan carefully before you apply — but that’s not necessarily a bad thing, to be honest.
- You value good customer service. Little information is publicly available for Navy Federal’s business banking services, but its loan services for individuals consistently receive top-notch ratings from independent reviewers like J.D. Power.
Navy Federal Credit Union small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated APR range | Fees |
|---|---|---|---|---|
| Commercial real estate loans | Not disclosed | 60 months, with 240-month amortization | Not disclosed | Title, appraisal, attorney fees and more may be required. |
| Secured business line of credit | Starting from $35,000 | Varies | Not disclosed |
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| Checking line of credit | $500, $1,000 or $5,000 | Varies | 17.90% | Annual fee: $50 |
| Term loans | Starting from $10,000 ($40,000 for commercial vehicle purchases) | Not disclosed | Not disclosed |
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Term loans
You can apply for a standard business term loan that you can use for a wide range of purposes, although Navy Federal suggests using them for equipment financing, company expansion or building improvements. You’ll be required to back your term loan with some kind of collateral (if you’re investing in property or equipment, just use your new acquisition).
Navy Federal allows you to borrow up to 75% of the cost of financing a new equipment purchase — which means you’ll need to come up with a down payment of at least 25%. Unfortunately, Navy Federal doesn’t provide any information on the cost of the loans or how long these loans last unless you actually apply for a loan. You may also be able to get an SBA loan through Navy Federal.
Line of credit
Navy Federal offers two types of lines of credit: a Business Line of Credit (BLOC) that you can draw against as needed or a Checking Line of Credit (CLOC) that serves to cover overdrafts from your Navy Federal business checking account. You’ll need to offer some sort of collateral for all BLOCs (technically making it a secured business line of credit) while the CLOC is collateral-free.
In addition to interest, you’ll pay an annual $325 fee for a BLOC ($50 for a CLOC), whether you use it or not. Navy Federal also has a “clean-up period” for some BLOCs, requiring you to keep a $0 balance for at least 30 successive calendar days a year. If your account requires this, you won’t be able to access it during this time. Make sure you have a back-up plan in place so this doesn’t affect your cash flow.
Commercial real estate loans
If you’re looking to buy, refinance or renovate your business location or an investment property, Navy Federal may be able to help with a commercial real estate loan. There are no prepayment penalties, although there are plenty of other real estate fees.
Unfortunately, you won’t find out how much these fees might be or even basic details like the range of rates the credit union is charging unless you apply for a loan. You may be able to choose between fixed or variable rates, however.
Navy Federal Credit Union borrower requirements
| Minimum annual revenue | $100,000 for term loans and lines of credit. Information not disclosed for other financing types |
| Minimum time in business | 1 year for most loans, depending on amount financed |
| Minimum credit score | Not disclosed |
Navy Federal Credit Union has extremely strict business loan application requirements. You’ll need to be a business member before you can apply for any financing options at all. To become a member, you’ll need to fill out a lengthy application, spend up to an hour on the phone with a banker and put down a deposit of $250 to $255, depending on your business type. If you have business partners or co-owners, they’ll each need to be independently eligible for membership as well.
Navy Federal Credit Union doesn’t offer preapproval on any of its financing options and you’ll need to have been a business member for at least a year before you can even apply for its business line of credit, term loans and commercial vehicle loans.
If you need a business loan fairly soon, Navy Federal won’t be a viable option unless you’re already an established member and you don’t mind a hard credit inquiry showing up on your personal credit report in order to check your loan options with this lender.
Required documents
If you haven’t yet applied for a Navy Federal business loan you might be left in the dark about what it can offer you, but one thing it’s very upfront about is the documentation you’ll need to apply. (Remember, that’s assuming you actually are eligible to apply for a loan in the first place.) The required documents vary depending on what type of loan you’re applying for, but generally include:
- Business plan
- Personal guarantee
- Completed loan application
- Business and personal tax returns from previous two years
- Certificate of insurance (for vehicle and equipment purchases)
- Current business financial statements, such as profit and loss statements, aging reports, balance sheets, etc.
Alternatives to Navy Federal Credit Union
| Navy Federal Credit Union | U.S. Bank | Bank of America | |
|---|---|---|---|
| Minimum credit score | Not disclosed | Not disclosed | 670 |
| Loan products offered |
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| Time to funding | Up to seven business days to receive a decision. Time to funding not disclosed after that | Not disclosed | Not disclosed |
| Starting APR |
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| Maximum loan size |
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| Minimum annual revenue | $100,000 or more for term loans and lines of credit | Not disclosed |
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Navy Federal Credit Union vs. U.S. Bank
U.S. Bank offers more financing options than Navy Federal Credit Union, although it’s also frustratingly quiet about many of the specifics you need to know in order to decide whether it’s worth applying for financing.
On the bright side, U.S. Bank does offer preapproval for some of its financing options,so it’s easier to get that information compared to the run-around you’ll need to do for Navy Federal. U.S. Bank does offer some military benefits, but only on the personal banking side, unfortunately.
Navy Federal Credit Union vs. Bank of America
Compared to Navy Federal, Bank of America also offers many more small business financing options and is much more openly available. Any small business owner is eligible to apply as long as they’re a U.S. citizen or legal resident at least 18 years or older. You don’t even need an existing account before applying for financing. Plus, Bank of America offers several small business financing fee discounts for military veterans.