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.
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.
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.
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.”
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:
If your business closely fits these criteria, which are those most traditional lenders follow, you should consider alternative sources of financing.
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.
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.
For all business loans, Bank of America requires the following information:
Bank of America also requires the following information about each business owner, guarantor and controlling manager:
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.
|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|
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.
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.
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.