Minneapolis, Minn.-based U.S. Bank traces its roots to First National Bank of Cincinnati, which opened in 1863. It adopted its current name in 2001 after a flurry of bank acquisitions. It has more than 73,000 employees and $462 billion in assets at the end of 2017, making it one of the biggest U.S. banks. It rose to that rank by building a diverse collection of core services, including consumer and corporate banking, payment services, wealth management and investment services. It also works with small businesses, offering them lines of credit, equipment financing and loans.
U.S. Bank has several loan products. Its lines of credit, for example, go up to $2 million and can be used to cover unexpected expenses. Its loans are used for larger purchases, such as real estate or accounts receivables, and its financing can help businesses quickly add needed equipment. It also can arrange funding for McDonald’s franchise owners, medical practices and real-estate deals. And it supports businesses in their quest for U.S. Small Business Administration loans.
While small businesses are likely to find a U.S. Bank loan product that fits their needs, qualifying for it may be difficult. U.S. Bank isn’t an alternative lender, which regularly funds small businesses with shaky credit, making up for that risk by charging higher rates. As a traditional bank, U.S. Bank’s customers must meet higher credit standards and provide collateral in some situations. But those that do often enjoy lower borrowing costs.
Small businesses in the Midwest and West, where most of U.S. Bank’s branches stand, enjoy other benefits such as local bankers who can help them identify the best loan products for their needs. It also makes sense for a small business working with U.S. Bank to open a business checking account with the institution. Borrowers who authorize automatic payments from one can receive a lower interest rate on some products.
While U.S. Bank offers funding for McDonald’s franchises, medical and dental practices, and real-estate deals and helps secure U.S. Small Business Administration loans, most small businesses will be interested in its lines of credit, small business loans and equipment financing. Those include:
Cash Flow Manager Line of Credit: Businesses can access the credit line online, at a branch, with a convenience check or by using a Visa Platinum Card. It requires a simple one-page application, and approvals often come within a few hours. Choose from variable or fixed-rate options.
Business Equity Line of Credit: This line leverages the equity in a business’s commercial real estate. Second liens are available but limited to 75% of the property’s value. There are monthly interest-only payment options, too.
Business Line of Credit: U.S. Bank’s largest credit line can be used for equipment, inventory or other large purchases. It’s secured by receivables or inventory, which lowers the interest rate and increases the credit limit. Interest-only payments are available on amounts over $100,000. It also can be used as overdraft protection on U.S. Bank business checking accounts.
Quick Loan: Businesses use these loans for general business purposes such as equipment and vehicle purchases and refinancing.
Business loan: Loan amounts up to $2 million, depending on the borrower’s financial situation and how the funds will be used. Business assets, equipment and titled vehicles can be used as collateral. Full amortization up to 84 months is available.
Equipment finance: Finance up to 100% of the cost of new or used items, including medical and dental equipment, office furniture and electronics, and machinery. Multiple pieces of equipment can be financed on one application, and soft costs, such as sales tax, training and installation, can be included, up to 25% of the equipment’s price. Payments can be deferred 90 days and made seasonally, monthly, quarterly, semi-annually or annually.
McDonald’s franchise financing: U.S. Bank offers financing to acquire, rebuild, relocate, or open a new McDonald’s franchise. This financing comes with fixed and adjustable rates and terms up to 10 years for qualified expenses. There is a three-month interest-only option, and there are no application fees. The bank also offers an equipment credit facility up to $50,000 per restaurant and a working capital line of credit up to $10,000 per restaurant.
Health practice financing: It also offers acquisition, buy-in, refinance, expansion or relocation, start-up and equipment financing funds for new and established healthcare practitioners. Terms can stretch 10 years, and there is a six-month interest only program for qualified borrowers, 12-month step-up programs and prepayment penalties can be waived.
Small Business Administration loans: U.S. Bank can help businesses secure SBA 7(a) loans, though their strict requirements make approval a tall task. These loans can be used for acquisitions, equipment, inventory, improvements, partner buyouts or working capital, and collateral can be business assets or real estate. Amounts up to $5 million are available, though the SBA express loan option is limited to $25,000 to $350,000 and can’t be used as a partner buyout. Terms for SBA 7(a) vary by use — 10 years for acquisition, equipment or tenant improvement; 7 years for working capital and inventory; up to 10 years for debt refinance — and rates are based on the London Interbank Offered Rate (LIBOR) or the prime rate.
Real estate loans: U.S. Bank also offers conventional and SBA-backed real estate loans, opening the door for the purchase, refinance or cash-out refinance of owner occupied commercial property. It offers variable and secured rates with terms of five, 10 and 15 years and amortization up to 25 years.
The maximum amount that can be borrowed is based on a business’s credit and the amount of financial information provided. Qualified borrowers that only complete the one-page application for equipment financing, for example, are limited to $150,000.
On its website, U.S. Bank doesn’t identify any businesses or industries that are ineligible for its loan products. But business owners with poor credit history or businesses in operation for less than six months may have a harder time qualifying for financing from a traditional bank.
Small business owners must apply through a banker. Reach one at a local branch, by phone or by email. Email requests should include contact information and the reason that funding is wanted.
U.S. Bank doesn’t offer an online application or boast of seconds-quick approvals. While it does claim that applying is easy, owners will have to start the process before finding out if they qualify for funding and under what conditions.
|Large variety of products with wide range of amounts means there is a product to fit almost any need.||Borrowers must meet high credit standards, including credit score, time in business and annual sales.|
|Local help is available at U.S. Bank’s more than 3,000 branches, which are mostly in the Midwest and West.||Some loan products require a more in-depth application for larger amounts.|
|Well qualified borrowers, especially those that sign up for a U.S. Bank business checking account, are rewarded with better rates.||No quick online application or approvals.|
Small businesses on solid financial footing are in the best position to secure funding from U.S. Bank. Those based in the Midwest and West may find it easier to work with the lender because of their proximity to one of its more than 3,000 branches.
Equipment financing payments may offer a tax benefit under IRS Section 179; an accountant can confirm. Quick Loan payments automatically deducted from a U.S. Bank business checking account can reduce the loan’s interest rate by 0.50%, though approval doesn’t hinge on having one. Payments for the Cash Flow Manager Line of Credit must be automatically deducted from a U.S. Bank business checking account. Quick Loans with terms less than 48 months can have a lower rate, but low credit score, high loan to value or other financial issues can increase it.
U.S. Bank offers small businesses a wide variety of loan products with the opportunity to qualify for favorable rates and terms. But they’ll need to have better credit than what’s accepted by alternative lenders. And a closer relationship with the lender, whether that’s being near a branch or opening a checking account, will make most deals better.