It makes sense for entrepreneurs in need of financing to seek business loans from brick-and-mortar banks—as you likely know, banks can offer their eligible clients some of the lowest interest rates and most generous repayment terms on the market. And if you’re a West Coast business owner, you may have considered a Union Bank small business loan, specifically.
As a reminder, Union Bank is headquartered in New York City, but they’re most concentrated on the opposite coast, with 398 physical branches in California, Washington, and Oregon. The bank also has commercial branches in Dallas, Houston, New York, and Chicago, but they can only provide loans for businesses and collateral located in California, Washington, and Oregon.
Like most banks, Union Bank offers its small business clients several kind of loans. In addition to the standard lines of credit and term loans (and many iterations of both), Union Bank also offers equipment loans, real estate loans, SBA loans, and more. What really sets Union Bank small business loans apart from their competitors is their diversity loan program, which assists business owners who’ve been historically disadvantaged in the lending space to secure credit products.
We’ll go into greater detail about all of these Union Bank small business loans, how to apply, and offer up some alternatives if you find that this particular bank isn’t right for your financing needs.
Types of Union Bank Small Business Loans
Union Bank offers an impressive array of loans, with several variations among those types. Loans can be secured or unsecured; fixed or variable rate; and short term or long term. For secured loans, the bank can accept different types of collateral, too, including outstanding invoices, inventory, equipment, savings accounts, UCC liens, and real estate.
There’s a lot to learn about Union Bank small business loans, and to understand them thoroughly, it’s always best to contact the bank directly. But for those still in the exploration phase, here’s what you really need to know about Union Bank’s core loan products.
Lines of Credit
Business lines of credit are excellent solutions for business owners who need access to short-term working capital but don’t necessarily have their eye on a single purchase (in which case, a traditional term loan would be a better fit). That’s because unlike a term loan, you don’t need to repay your line of credit in regular installments. Rather, you draw the funds you need, when you need them, then repay what you use.
In particular, Union Bank offers three types of lines of credit, which are differentiated based on how they’re secured: unsecured, UCC secured, or CD/savings secured. All three have variable interest rates and are repaid over a year-long period.
Line amounts differ among these three products, too:
- Unsecured: $25,000 to $100,000
- UCC secured: $100,0001 to $250,000+
- CD/savings secured: $5,000 to $250,000+
You’ll need to talk to a relationship manager if you’d like to request a line of credit amount larger than $250,000. Also be aware that both types of secured lines come with additional fees attached for documentation and UCC processing.
Like their lines of credit, Union Bank differentiates among their term loans by how they’re secured. And also like their lines of credit, you can opt for a Union Bank small business loan that’s unsecured, UCC secured, or CD/savings secured.
What they all have in common? They’re fixed rate, carry repayment terms of up to 60 months, and can be used for any business-related purpose.
Loan amounts are as follows:
- Unsecured: $10,000 to $100,000
- UCC secured: $100,001 to $250,000+
- CD/savings secured: $5,000 to $250,000+
Once again, you’ll need to contact the bank directly if you’re seeking a loan that exceeds $250,000, and UCC and CD/savings secured loans come with additional fees.
Commercial Real Estate Loans
Business owners specifically seeking loans to purchase, refinance, or improve commercial property should look into Union Bank’s owner-occupied commercial real estate loans.
Union Bank commercial real estate loan repayment periods can reach up to 20 years, carry either fixed or variable interest rates, and fully amortize. Loan amounts can reach up to 75% of the property’s appraised value, and they’re secured by the property itself. To be eligible, the owner needs to occupy at least 50% of the property’s rentable space.
These collateralized loans are designed expressly to help business owners purchase the expensive equipment they need to operate—think computers, heavy machinery, kitchen equipment, software, and even office furniture.
Union Bank equipment loans are secured with the equipment that the borrower is purchasing itself, so the loan amount is based on the value of that equipment. Union Bank may offer eligible borrowers up to 90% of the value of the equipment if it’s new, or 80% if used.
Repayment terms are up to 60 months and interest rates are fixed. In addition to an initial fee, you’ll also be responsible for paying a documentation fee and a UCC processing fee for your Union Bank equipment loan.
If you’re not prepared to buy your equipment outright, Union Bank offers equipment leasing, too. Unlike an equipment loan, in an equipment leasing deal your lender holds the title to the equipment, and you’ll pay them for the use of that equipment over a predetermined amount of time.
Union Bank actually has three equipment leasing plans, all of which offer borrowers different options when their lease term is up:
- $1 Buy Out: Borrowers who are certain that they’ll ultimately want to keep their equipment can purchase the equipment for $1 at the end of their term.
- Fair Market Value: With this plan, customers can opt to extend the lease term, return the equipment to the lender, or buy the equipment at its fair market price.
- 10% Purchase Option: When the customer’s lease term ends, they can choose to renew the lease agreement, return the equipment, or buy it at 10% of its original price.
In general, equipment leasing is the better option than an equipment loan for business owners who anticipate needing to replace or upgrade their gear in a few years’ time. But if you’re sure that you’ll be holding onto your equipment for a while, an equipment loan may be less expensive in the long run.
Union Bank is an SBA Preferred Lender, so they can disburse these government-backed loans to qualified borrowers.
Although SBA loans are certainly not easy to secure, their qualifying criteria are typically less stringent than those for traditional bank loans. That’s due in part because the U.S. Small Business Administration guarantees the majority of the loan amount if the borrower defaults, which seriously lessens the bank’s risk in issuing these loans. Plus, the SBA sets a maximum interest rate that lenders can’t exceed to ensure their affordability and fairness.
If you meet SBA eligibility standards, though, do be prepared to undergo a lengthy SBA application process. Union Bank’s in-house team of SBA specialists are prepared to help you with your application, however.
The SBA has designed several types of loans, but Union Bank offers its two most popular loan programs: SBA 7(a) loans, and SBA 504 loans.
SBA 7(a) Loans
As the SBA’s most flexible loan program on offer, 7(a) loans are also the most popular. Funds can be used toward almost any business-related purpose, including (but not limited to):
- Working capital
- Purchasing equipment
- Purchasing commercial real estate
- Refinancing debt
- Business expansion or acquisition
- Buying a franchise
SBA 7(a) loans from Union Bank carry repayment terms of up to 10 years for working capital, equipment purchase, or business expansion or acquisition; or up to 25 years for commercial real estate. Loan amounts range from $250,000 up to $5 million (or $5.5 million for manufacturers).
SBA 504 Loans
Where SBA 7(a) loans can be used for almost any business-related purpose, SBA 504 loans are designed only for the purchase or refinance of owner-occupied commercial real estate or major equipment. Union Bank can disburse SBA 504 loan amounts of up to $20 million, and interest rates will stick around that SBA-set maximum.
One of Union Bank’s most compelling features for small business owners are its loan programs that service minority, female, and veteran business owners, all of whom fall under the bank’s “Diversity Lending” umbrella. Eligible business owners can choose among the same Union Bank small business loans as listed above, but this program is designed expressly to offer these entrepreneurs easier access to credit.
To qualify for a diversity Union Bank small business loan, applicants need to meet the following eligibility standards:
- Own and actively manage at least 51% of the business
- Not exceed $20 million in annual revenue
- 2+ years in business
- Need less than $2.5 million
- Qualify as a minority according to the bank’s race and ethnicity categories; a woman-owned business; or a veteran under laws administered by the Department of Veteran Affairs.
Top Alternatives to a Union Bank Small Business Loan
Remember that Union Bank financing is only available to businesses and collateral based in California, Washington, and Oregon. Of course, if you don’t live in one of these states, you’ll need to find a bank that’s located closer to your home or business.
The best banks for business loans tend to be larger and have more national branches—but these large banks also tend to have the strictest loan eligibility requirements. So if you’re intent upon securing a bank loan, you’ll have better luck qualifying for a loan with your local community bank or credit union.
And if you can’t yet qualify for bank financing, you’re not out of luck. Instead, try applying for a loan with an online, alternative lender. These non-bank lenders offer many of the same financial products as banks do—including lines of credit, term loans, equipment loans, and even SBA loans—but their eligibility standards are generally much less demanding than banks’ are. They also offer customer faster access to capital, so if you’re in a time crunch, the online route may serve you better for now. That said, it’s likely that you’ll need to pay a higher interest rate for your online loan than you would for a bank loan.
If you’re a minority, veteran, or female business owner and are drawn toward Union Bank’s Diversity Lending program—but you aren’t eligible for a Union Bank small business loan—you can seek tailored financing options elsewhere, including grants and specialized loan programs.
How to Apply for a Union Bank Small Business Loan
If you think that a Union Bank small business loan could work for you, you can apply in two ways: Either call 833-UB-SMBIZ, or apply at your nearest Union Bank branch. Note that you can only apply over the phone if your requested loan amount is under $1 million. If it exceeds $1 million, you’ll need to apply in person.
Union Bank will review all the material provided in your business loan application, as well as your personal credit score, to make a financing decision. After applying for a Union Bank small business loan, you’ll receive a response within 48 hours if your loan request is up to $250,000, or up to five business days if your requested amount exceeds $250,000.
If you are approved for your loan (congratulations!), your Union Bank small business loan will be deposited into your chosen bank account. Payments will be pulled automatically from your bank account, too, so you don’t need to worry about missing an installment.
Once again, however, the only way to know whether a Union Bank small business loan is right for you is to reach out to the bank directly. And if you don’t yet qualify for a Union Bank small business loan—or if you live in any of the 47 states the bank doesn’t service—contact a loan specialist to help you find a better alternative.