An Insider Look At How Capital One Small Business Loans Can Help You

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

Need small business financing?

Well, small business owner, you have a few paths you can take for funding. You can knock on the doors of family, friends, or investors for a little help. Or you can try applying for a small business loan from an online lender or a traditional bank.

If you choose to go the commercial bank route, you might have more financing options than you thought. Yes, banks do have notoriously tight credit for small businesses. But with more and more traditional banks prioritizing their relationship with small business owners, it’s worthwhile to keep these lenders on your list.

Your next bank to check out? Capital One.  

Capital One offers a variety of small business banking services through their Spark Business program. They don’t just offer checking and savings accounts, though. They also offer different kinds of Capital One small business loans.

Use this guide to find out if any of them are the right financing solution for you.

Capital One Small Business Loans: What They Have to Offer

Capital One can give you the classic bank loans—lines of credit and term loans. That’s pretty standard as far as bank loans go.

But those aren’t the only products in Capital One’s small business loan lineup.

They also offer equipment financing, SBA loans, and business credit cards.

We’ll run through the details all the Capital One small business loans available, but first, how can you get one of these small business loans?

Here’s how you qualify for Capital One small business loans.

How to Qualify for Capital One Small Business Loans

If you’re an established Capital One small business member, you might be eligible for one of the Capital One small business loans.

How do you know if you qualify for one?

You’ll need to sit down with a banker at your local Capital One branch to find out… But Capital One is expecting a pretty tight application in order for you to even be considered.

Here are the 4 key things the bank needs to see in your application for Capital One small business loans.

1. Preparedness

The first thing to know about qualifying for Capital One small business loans is this:

You need to be prepared.

Capital One wants to see if you’ve put some thought and effort into your small business loan application. So when you sit down with your local Capital One representative to talk about your options, don’t come empty-handed.

Capital One will ask for an executive summary for every small business loan application. In your summary, describe why you want the loan and how much you need to borrow. You’ll need to convince the bank that you’re borrowing for a sound business reason and that you’ve thought through the minimums and maximums of what you can afford to borrow. You’ll also need to show that you’ve thought through what type of loan you need and for how long you need it. Finally, your executive summary will show Capital One how you plan to pay them back.

On top of an executive summary, you’ll need to provide a business plan. Your business plan is your map for running your business. Capital One considers it an essential part of your eligibility for Capital One small business loans. A great business plan in Capital One’s eyes includes an analysis of your market, information about how you run your business, a marketing and sales strategy, and an income and cost forecast for the future.

All in all, Capital One wants to first see that you’ve put in the time to think about a small business loan carefully and realistically.

2. Ability to Repay

Once the bank has reviewed your executive summary and business plan, Capital One will then flip the page of your application to check out your business’s financials.

In order to qualify for Capital One small business loans, you’ll need to prove that you have a sizable amount in annual revenue and stability in your cash flow.

Capital One doesn’t set a strict rule in how much you need to prove to qualify—each loan is approved case-by-case. But you’ll need to prove that your sources of repayment are currently strong and will continue to be in the future.

You’ll also need to provide Capital One with a valuation of the collateral you have to offer on your small business loan. If you have a significant amount of valuable assets that you’re willing to back your loan with, qualifying for Capital One small business loans shouldn’t be too hard. With a substantial amount of collateral securing the loan, Capital One can just liquidate that collateral to recoup some of their losses if you default.

3. Creditworthiness

If you’ve applied to traditional bank financing before, this won’t come as a surprise.

In order to qualify for Capital One small business loans, you’ll need to prove that you’re a responsible borrower. To gauge your reliability, Capital One will consider a summary of your personal credit history.

If you have a good personal credit score, you should be in great shape for one of the Capital One small business loans.

And if your credit report has some blemishes on it, Capital One won’t throw your small business loan application out. They’ll still consider your application if you can explain clearly why your credit score is where it is and what you’ve done to recover. Capital One will want to see that you’ve addressed all problems up front.

4. Character

Banks won’t just lend to anyone, and Capital One is no exception.

Capital One will request references for your small business loan application. They consider references from the community and references from your past business experiences.

All of this is to see if you check out as a business owner, and to determine whether or not lending to you is a safe bet.

***

Unlike other small business lenders, it isn’t just a numbers game with Capital One.

You’ll still need to prove your creditworthiness and ability to pay back, but the bank will also consider how much thought you’ve put into your application. In the end, you need to prove that you believe that your business will grow from taking on debt with Capital One.

1. Capital One Small Business Loans: Working Capital Lines of Credit

As a small business owner, you’re bound to run into times where you could really use some extra cash.

If you need to improve your day-to-day cash flow, Capital One recommends their working capital line of credit product.

In general, a business line of credit is a great financing solution for business owners who need flexibility and affordability with their capital. The Capital One line of credit is a particularly good product if you need to bridge the gap between your expenses and cash flow.

Getting Into the Details

What can you expect when you take out one of these Capital One small business loans?

Here’s what you need to know:

Capital One offers lines of credit starting at $10,000. The bank doesn’t cap you at a maximum amount for a working capital line of credit, but the amount you qualify for depends on your business history and financial strength. If you end up getting a line of credit for $50,000 or less, you won’t need to secure the credit line with a financial deposit. If you take out more in financing, Capital One requires financial statements to guarantee the line of credit.

Capital One’s working line of credit is revolving credit, so as long as you’re repaying what you draw, there’s no limit to how many times you can tap into your credit line. And when you do draw from your working capital line of credit, you’ll have to make minimum monthly repayments.

Capital One doesn’t specifically set a range of interest rates on their working capital credit line. Instead, your rate will be determined case-by-case, depending on your creditworthiness and previous relationship with Capital One.

How to Qualify

Interested in these Capital One small business loans?

You’ll need to contact your local Capital One branch to talk to one of their small business banking specialists. To give you a good idea if you’ll qualify, though, here’s your basic minimum requirements:

  • Have been in business for at least two years
  • Have or open a Capital One Business Checking Account
  • Own a combined 50% of your business

2. Capital One Small Business Loans: Business Installment Loans

When your small business has big plans for growing, consider these Capital One small business loans: business installment loans.

You might have heard of an installment loan before—it’s really no different that an average medium-term loan.

Capital One advances you a lump sum of cash that you can use to grow your small business. You’ll pay them back with fixed monthly payments over a set term.

Getting Into the Details

Here’s what to expect with these Capital One small business loans.

You can apply for a Capital One installment loan starting at $10,000 for a loan amount. Your business installment loan will come with a term of up to 5 years in length. And again, Capital One doesn’t set a range of interest rates on their installment loan. The rate you get depends on the loan amount, the loan term, your creditworthiness, and your established relationship with the bank.

Capital One considers their small business installment loan the perfect fit for business owners who want to make big capital investments. So if you need to consolidate debt, significantly expand your operations, or purchase long-term assets, these Capital One small business loans might work for you.

How to Qualify

To qualify for these Capital One small business loans, it’s the same deal as the working capital line of credit. You’ll need to have been in business for at least 2 years, have a Business Checking Account with Capital One (or be prepared to sign up for one), and own a combined 50% of the business.

And as with any medium-term loan on the market, these Capital One small business loans will be a little harder to qualify for than other products. With their business installment loan, Capital One extends borrowers more credit over a longer term, so they’ll only work with the most qualified business owners.

3. Capital One Small Business Loans: Equipment & Vehicle Loans

Almost every small business needs equipment to operate, but not every small business owner can afford the price tag that comes on machinery they need.

If you need to buy new equipment or vehicles for your small business, consider using Capital One’s equipment and vehicle loans.

Getting Into the Details

As with any equipment loan, Capital One will help you pay for your new equipment or vehicles by advancing you capital based on the value of the equipment you’re buying. An equipment or vehicle loan from Capital One is a good option for borrowers who need to purchase at least $10,000 worth of equipment.

If you’re considered a “qualified” borrower by Capital One’s standards, the bank can finance up to 100% of new equipment or vehicles. And if you’re buying used equipment or vehicles, Capital One might help you finance 110% of the value.

Capital One will extend your equipment loan for up to 5 years, and once you’ve paid them back over fixed monthly payments, you own the equipment outright.

These Capital One small business loans are great for just your average equipment and vehicle purchases, but they can also be used to refinance your existing equipment.

How to Qualify

No surprises here—Capital One has the same qualification standards for equipment financing as it does for lines of credit and term loans. You’ll need to have been in business for 2 years, have a Business Checking Account, and own 50% of your business.

But after that, most of your qualification for these Capital One small business loans depends on the equipment or vehicles that you’re buying. The amount, interest rate, and term you get not only depends on your creditworthiness and ability to repay, but the value and expected lifetime of the equipment you’re purchasing.

4. Capital One Small Business Loans: SBA Loans

Like most banks offering small business loans, Capital One puts a lot of emphasis on their SBA lending program.

Capital One offers SBA-guaranteed loans from the 7(a) Loan Program, the 504 Loan Program, and the SBA Express Program. If you’re looking for a small business loan from Capital One, going the SBA route might be the best option for you.

Why?

Well, you’ll have longer payback terms and higher borrowing limits, but most importantly, they’ll be much easier to qualify for.

The SBA guarantees a portion of the Capital One loan you apply for (usually up to 75%). In doing so, they minimize Capital One’s risk of lending to small businesses—making it that much easier for you to qualify for Capital One small business loans.

7(a) Loans from Capital One

The 7(a) Loan Program is the SBA’s most common and popular loan program. You score up to $5 million to use for a variety of business purposes over a long term.  

The interest rate you’ll get on a 7(a) loan is up to you and Capital One. The SBA stays out of the rate negotiation, but they do set a maximum interest rate that Capital One can charge—set by the base rate and an allowable spread.

In order to qualify for a 7(a) loan from Capital One, you’ll have to meet the SBA’s eligibility standards. But the key factors in your eligibility for a 7(a) loan are how your business receives its income, the type and character of business ownership, and where your business operates.

504 Loans from Capital One

If you’re making a big fixed-assets purchase, like equipment or real estate purchases, then a loan from the 504 Loan Program might be your best financing fit.

With the 504 program, Capital One works with a Certified Development Company (CDC)—a nonprofit corporation that contributes to the development of local communities—to help finance the growth of small businesses in certain areas.

Capital One and the appropriate CDC in your area can help you finance 100% of your real estate or equipment costs, but you’ll need to meet the SBA’s eligibility standards to qualify.

SBA Express Loans from Capital One

If you want the rate and terms the SBA has to offer, but at the speed of an online lender, consider applying for an SBA Express loan from Capital One.

The SBA Express program offers smaller loans of no more than $350,000 at an accelerated turnaround time.

So if only need a small amount of capital and you don’t have any time to spare, try the SBA Express—you could have your application approved within 36 hours of applying.

5. Capital One Small Business Loans: Business Credit Cards

As you’re searching for small business financing, you probably wouldn’t think to check out business credit cards.

And while not many people consider business credit cards as traditional loans, we think they should be added to your list of Capital One small business loans. Because when it comes to securing the financing your small business needs with Capital One, they’re probably your most realistic choice.

Capital One offers business credit cards with cash back and mileage rewards through their Spark Business program:

Capital One Spark Cash Rewards

Capital One offers three business credit cards with sizeable cash back rewards earnings.

The Spark Classic for Business is a great business credit card for borrowers with average credit, letting you earn 1% cash back on your purchases.

And if you qualify for the Spark Cash for Business, you’ll get a higher rewards rate: 2% cash back on all purchases. As a cherry on top, you’ll get a $500 cash bonus once you spend $4,500 on the card in 3 months.

If you use any of the Capital One cash back cards, you’re not only covering your necessary business expenses, you’re also putting valuable savings back into your business.

Capital One Spark Miles Rewards

If you’re constantly traveling for your small business, consider using either of the Spark miles rewards cards.

With the Spark Miles for Business card, you’ll earn 2 miles per $1 spent on all purchases. Plus, as a welcome offer, you’ll get a bonus of 50,000 miles (equal to $500 in travel) once you spend $4,500 in the first three months.

Using either of the Spark miles rewards cards is a great way to cover your purchases and put your earnings back towards your business’s travel costs.

Why You Should Use Capital One Business Credit Cards as a Loan

The rewards program on Capital One’s business credit cards is a reason in and of itself to take out one of these business credit cards. But when it comes to financing a business, using a business credit card in place of a loan can be a smart idea, too.

Like all other traditional bank loans, small business financing from Capital One is hard to qualify for. Especially if you only need a small amount of financing. If you choose to go the business credit card-route, you’ll have a much better shot at qualifying.

Plus, some of Capital One’s business credit cards come with a 0% introductory APR for 9 months. You’re essentially receiving a free loan for almost a year. You can use the business credit card to make your necessary business expenses, and you won’t pay extra on what you borrow.

There are a lot of situations where it makes more sense to use a business credit card over a traditional business loan to grow your company—so don’t cross business credit cards off your list of Capital One small business loans.

The Bottom Line on Capital One Small Business Loans

Capital One small business loans are great options for business owners who have some experience under their belt and the financials to prove it. But in the end, these bank loans are tough to qualify for—all bank loans are.

If you think an SBA loan is a great fit for your business—and it probably is—then Capital One might be a great lender to work with.

But when it comes down to it, Capital One just isn’t as active an SBA lender as other banks for small businesses are. If you want to go the SBA route, you’d be better served working with Wells Fargo or Chase: they both sit in the top 5 out of the 100 most active SBA lenders.

Capital One’s business credit cards might be your best bet in terms of what you can qualify for. But as always, check all your Capital One options out! You’ll never know what your best financing option is if you don’t shop around some. And if your business is one of the lucky few that qualifies for Capital One small business loans, you’ll be happy you applied.

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

2 Comments

Most Recent

  • Rishi Gera

    Tuesday, September 27th, 2016

    Great loan options!

  • meredithfundera

    Tuesday, September 27th, 2016

    Sounds like a good deal!

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