The Best Insider Guide to 5 Bank of America Small Business Loans

Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

Walk down any street in the United States and you’ll probably stumble across a Bank of America outlet. Maybe you’re strolling by one of their 4,700 financial centers or passing one of their 16,000 ATMs.

You don’t need to look at their their numbers to know just how big of an influence Bank of America has.

Actually, we take that back. If you’re a small business owner, here’s one fact you might care about: Bank of America works with over 3 million small business owners in the U.S. And they don’t only have business checking accounts to offer. They also offer their business customers a suite of small business loans to help finance their growth and success.

Could you be one of the 3 million business owners who work with Bank of America for small business financing? Use this guide to find out.

Bank of America Small Business Loans: What You Need to Know

In 2015, Bank of America extended $10.7 billion in financing for small business owners.

And if your business works with Bank of America, you just might be able to get a slice of that credit in one of their 6 available loan products:

We’ll go through the ins-and-outs of all Bank of America small business loans.

But first—will you qualify for Bank of America small business loans?

How to Qualify for Bank of America Small Business Loans

When it comes to qualifying for Bank of America small business loans, here’s the big picture: you’ll need to meet their 5 C’s of credit.

Capacity

Bank of America won’t extend your small business credit if they aren’t confident they’ll get their money back, plus interest. So before they lend to you, you’ll have to prove that you have the financial capacity to support debt on top of all the other expenses of running a business.

Bank of America typically requires businesses to have $1.25 of income to support every $1 of debt. That extra $0.25 padding gives your business a little leeway to cover unexpected expenses along the way.

Capital

Bank of America will also check out your business’s capital assets, like your cash and equipment. They’ll also want to know how much capital you and others have invested in your business.

Bank of America wants to see if you have enough capital to support the financing you want. Plus, looking at your capital investments helps the bank gauge if your business has a promising future.

Collateral

Not all Bank of America small business loans require collateral, but some do. When they’re deciding if you’re eligible for Bank of America small business loans, they’ll want to see what you have to offer as collateral—like your business’s accounts receivable, inventory, cash, equipment, or real estate holdings.

Bank of America might also consider any existing debt you still owe based on that collateral.

Conditions

Most of Bank of America’s 5 C’s of credit aren’t too surprising—almost all lenders will consider these criteria before they lend to you.

“Conditions” is a little different. Before giving out Bank of America small business loans, the bank will consider the state of the economy at that time, what’s going on in your industry, and any pending legislation relevant to your business that might affect your ability to make payments.

Put simply, Bank of America has the long game in mind. The economic and industry conditions might be prime right now, but will you be able to make your payments in the future? Bank of America will consider that closely before lending to you.

Character

It’s not just a numbers game with Bank of America.

When they’re deciding whether or not they want to lend to you, Bank of America will also consider who you are, what your experience is, and the kind of business you run.

Bank of America strongly believes that your personal integrity and good standing as a citizen is closely tied to the success of the business.

So, Bank of America will look closely at your personal credit score, your personal background, your resume, and your business plan.

When you’re applying for Bank of America small business loans, pay attention to that business plan—the bank considers it closely. Make sure you’ve put together a detailed and thorough business plan before applying for Bank of America small business loans.

In your business plan, be sure to include your time in business. Bank of America only lends to businesses who have operated for at least 2 years.

One More “C”: Communication

Bank of America’s sixth “C” of credit comes as a side note, but it’s important to remember during the business loan application process.

Bank of America wants to see that you’re willing to communicate openly about your business’s opportunity and challenges. In order to benefit from one of the Bank of America small business loans, you’ll need to be realistic with your banker and communicate your needs and concerns when it comes to financing.

Applying For Bank of America Small Business Loans? Here’s What You’ll Need to Apply

Gearing up to apply for a loan from Bank of America?

Here’s the business information they’ll ask for:

  • Basic contact information (Business name, street address, and phone number)
  • Tax ID
  • Nature and industry of the business
  • Date the business was established
  • Business acquisition date of current ownership
  • Number of employees
  • Annual net profit
  • Annual gross sales
  • List of outstanding debt obligations (Including lender, current loan balance or credit limit, and monthly payment)

Bank of America will ask for personal information, too:

  • Basic contact information (Name, street address, phone number)
  • Social security number
  • Date of birth
  • Personal income
  • Resident status (rent or own) and monthly payments

***

Will you qualify for Bank of America small business loans?

Well, the only way to find out is to call one of their small business specialists on the phone or visit one in person. Unlike many alternative lenders, Bank of America doesn’t have an online application.

The Bank of America Small Business Loans You Need to Know

Bank of America offers a wide variety of business loans, and each loan product will fit a different business with a different financing need.

Are any of the Bank of America small business loans a fit for your business?

Here’s your list of them all:

1. Bank of America Small Business Loans: Business Line of Credit

Bank of America’s business line of credit offers business owners flexible capital that can help manage the ups and downs in cash flow. If you need some seasonal working capital or help with your inventory purchases, your Bank of America line of credit will be in your back pocket.

Whenever you need the funds, you can easily tap into your line of credit online, over the phone, or in a Bank of America financial center. When you take funds from your credit line, you’ll only pay interest on the amount you borrow. And once you’ve paid in full, your line of credit gets refilled to its original amount.

Bank of America offers lines of credit starting at $10,000. And while the bank doesn’t set a hard maximum on the amount you can secure for your line of credit, they’ll determine how much you qualify for based on how you plan on using it.

And when it comes to Bank of America lines of credit, you have two options: secured and unsecured lines of credit.

You might qualify for an unsecured business line of credit if you’re only borrowing $100,000 or less.

If you’re borrowing more than $100,000, you’ll be applying for a secured business line of credit. Borrowers can secure their line of credit with either a blanket lien on their assets or with a certificate of deposit. If your line of credit is secured with a certificate of deposit, you can borrow up to 100% of the value of that deposit.

What Will a Business Line of Credit Cost You?

If you take out one of these Bank of America small business loans, here’s what to expect with rates and fees.

The interest rate you get on your line of credit is based on the prime rate. But the exact rate you get depends on your overall business relationship with Bank of America. If you’ve proved that you’re smart with your business’s financials, you’ll probably get a lower rate.

You’ll also have to pay upfront fees depending on the size of your line of credit. If you borrow $100,000 or less, you’ll have to pay Bank of America $150 in upfront fees. For amounts above $100,000 and no more than $250,000, you’ll pay $250. And finally, borrowers with credit lines above $250,000 will pay 0.5% of the line amount in upfront fees.

Bank of America offers revolving lines of credit—meaning that as long as you pay back in full, your line of credit is refilled to its original amount. But when you do renew your line of credit, you’ll have to pay a renewal fee.

The renewal fees follow the same pricing as the upfront fees: $150 for amounts up to and including $100,000, $250 for amounts above $100,000 and up to and including $250,000, and 0.5% of the credit line for amounts above $250,000.

The Bottom Line on Bank of America Lines of Credit

If you want a financing product that’s both sizable and flexible, these Bank of America small business loans fit the bill.

Bank of America can offer you a large credit line if you qualify, but make sure you really need it—you’ll pay steep fees the larger your credit line gets.

2. Bank of America Small Business Loans: Secured Business Loans

For business owners who need just a one-time lump sum of capital, Bank of America offers “Secured Business Loans.” Secured Business Loans are no different than your run-of-the-mill traditional term loan.

Bank of America offers term loans starting at $25,000 for a variety of business needs: purchasing inventory or materials, financing accounts receivables, or refinancing debt.

And as the name suggests, these Bank of America small business loans are secured business loans. You can choose to either secure your loan with a blanket lien on your assets or a certificate of deposit.

Once you’ve decided how you’ll secure your term loan, then you’ll know the term you’ll get on your loan:

  • Bank of America term loans secured with a blanket lien on general business assets come at terms of up to 3 years.
  • Bank of America term loans secured with a certificate of deposit come at terms of up to 5 years.

After that, you’ll pay your loan back on a monthly repayment schedule, automatically deducted from your Bank of America business checking account.

What Will a Secured Business Loan Cost You?

These Bank of America small business loans come at rates that are entirely based off your overall business relationship with Bank of America.

You’ll also have to account for a few fees that come with these loans. You’ll pay an upfront fee of 0.5% of the amount borrowed.

But be aware of other fees Bank of America will charge you at the loan closing. These might include title fees, appraisal fees, and filing fees.

The Bottom Line on Bank of America Secured Business Loans

These Bank of America small business loans can be a great catch-all business financing solution, especially if you already have a great business relationship with Bank of America.

Secured Business Loans come at what Bank of America considers “competitive rates.” And while these small business loans will definitely be cheaper than a lot of other loan products out there, watch out for those extra fees.

Interest rate doesn’t say it all. Make sure you convert your interest rate to APR in order to account for what you’ll dish out in fees to Bank of America. (And definitely check out one of Fundera’s free APR calculators to find out the true cost of your loan!)

3. Bank of America Small Business Loans: Equipment Financing

Shopping around for a shiny new piece of equipment for your small business?

Before you put a dent in your cash flow by paying out-of-pocket, consider equipment financing with Bank of America instead.

Bank of America can help you finance up to 80% of the purchase price of certain types of equipment:

  • Light-industrial equipment (office machines and equipment)
  • Heavy-industrial equipment (conveyor belts, printing presses, and stationary machinery)
  • Commercial vehicles greater than 2.5 tons (heavy trucks and trailers)

Like most equipment loans, Bank of America requires no collateral on their equipment financing product. Instead, the equipment you purchase acts as collateral on the loan. If you can’t pay Bank of America back, they’ll simply seize the piece of equipment from your business.

When you take out an equipment loan from Bank of America, you’ll have a maximum term of 5 years on your loan. Your interest rate will depend on your overall relationship with Bank of America, and you’ll need to pay an origination fee of 0.5% of the amount you borrow.

Plus, there’s a limited time offer on these Bank of America small business loans. You’ll get a 0% interest rate for the first 6 months of using the purchased equipment. After that, you’ll have a set interest rate through the maturity of your equipment loan.

The Bottom Line on Bank of America Equipment Loans

Equipment financing with Bank of America might be a good option if you need help with most of the cost of equipment—but not all of it. If you can pay that remaining 20% of the equipment yourself, you’ll end up saving on interest payments in the long run.

But if you can’t afford the cost of your new equipment at all, you might want to consider Bank of America’s leasing program instead.

4. Bank of America Small Business Loans: SBA Loans

Bank of America is what’s called a “Preferred SBA Lender.”

It might sound fancy, but it really just means that Bank of America is a seasoned vet when it comes to SBA lending.

In 2016, Bank of America gave $69,614,700 in financing through 3 different SBA loan programs: the 7(a) Loan Program, the CDC/504 Loan Program, and the SBA Express Program.

When it comes to Bank of America small business loans, going the SBA route might be your best bet.

Here’s why:

By guaranteeing a portion of the loan issued by Bank of America, the SBA minimizes the bank’s risk. Depending on the SBA loan you secure, the SBA could guarantee up to 85% of the financing. So if you default on your loan, the SBA has to fulfill their guaranteed portion and recoup most of Bank of America’s losses.

Put simply, the SBA takes on most of the risk—not you or Bank of America. In the end, Bank of America is more likely to approve small business borrowers for an SBA loan.

If you think an SBA loan is the right financing solution for your business, check out Bank of America’s chart on terms and rates for each SBA loan they offer.

The Bottom Line on Bank of America SBA Loans

Securing an SBA loan from Bank of America is a great option for those who don’t qualify for other Bank of America small business loans. In fact, Bank of America SBA loans might be the only option that the smallest businesses qualify for—since they have much easier qualification standards than other Bank of America small business loans.

But when it comes down to it, business owners who want SBA loans might have an easier time securing financing at other big banks. On the list of the SBA’s top 100 lenders, Bank of America ranks #48. If you’re looking for strong SBA lending capacity, you might want to check out Wells Fargo—they rank #1.

5. Bank of America Small Business Loans: Business Credit Cards

You might not expect to see business credit cards on the list of Bank of America small business loans.

But financing your business with one of Bank of America’s business credit cards might be the smartest move for your business.

Bank of America offers a handful of business credit cards that are tailored for business owners who want cash back rewards, travel rewards, or low interest cards.

Why You Should Use a Bank of America Business Credit Card as a Loan

As you read through this list of Bank of America small business loans, you might notice that these “small” business loans are actually pretty big. In fact, Bank of America is much more likely to approve small business loans on the larger end of the spectrum—think $250,000 and up.

But as a small business owner, you might not need that much. If you need just $10,000 or $20,000 in financing for your business, a business credit card could be a better fit.

Plus, you might not love the idea of securing one of the Bank of America small business loans with a blanket lien on your assets. We don’t blame you—if you default on your loan, your lender could seize everything you own. (But chances are low… They’d only take assets whose value equals what you still owe.)

With a business credit card, you won’t have to worry about putting up collateral for your financing.

Are Any of the Bank of America Small Business Loans Right for You?

Now that all the Bank of America small business loans are laid out in front of you, you’re probably wondering if you should go ahead and apply for one.

Well, before you get deep into a loan application with Bank of America, ask yourself this:

“Do I qualify for any Bank of America small business loans?”

Unfortunately, the answer to that question might be “no” for a lot of small business owners.

The bottom line?

To qualify for a Bank of America small business loan, you need to have been in business for at least 2 years, have an average annual revenue over $100,000, and have more than just a few employees—we’re talking at least 100. In the end, you and Bank of America might not see eye-to-eye on what qualifies as a “small” business.

But if you have an established relationship with Bank of America and your business fits the bill, these small business loans could be a great fit!

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Georgia McIntyre

Georgia McIntyre

Finance Writer at Fundera
Georgia McIntyre is the resident Finance Writer at Fundera. She specializes in all things small business finance, from lending to accounting. Questions for Georgia? Comment below!
Georgia McIntyre

1 Comment

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  • Ben Rashkovich

    Monday, September 19th, 2016

    I had no idea about Bank of America's "sixth C"... This is really useful information, Georgia! Thanks!

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