Bank of America Business Line of Credit: 2018 Review

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Your Guide to Bank of America's Line of Credit

If you’re in need of financing for your business, but aren’t looking to take out a loan, it’s likely you’ve looked into business lines of credit.

And perhaps, as you’ve narrowed down your search for business loans, you’ve looked into business lines of credit from Bank of America—one of the world’s largest banks and a best bank for business loans.

The Bank of America business line of credit is often a go-to solution for business owners looking to access sustained, revolving funds. Plus, Bank of America offers both a secured and an unsecured business line of credit, so you’ll have options.

In this guide, we break down everything you need to know about Bank of America business lines of credit. 

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What is a Business Line of Credit?

A business line of credit is a flexible financing option in which a lender extends a maximum amount of credit to a borrower from which the borrower can draw for access to cash to make purchases—and the Bank of America business line of credit is no different.

Just like all business lines of credit, with the Bank of America business line of credit, you’ll draw funds from your credit limit and pay back the creditor (Bank of America, in this case) with interest over time. However, you only pay interest on what you end up borrowing—not the lump sum of the credit line.

Once you pay back the amount you borrowed, your credit line is restored to the original amount.

For example:

If a lender gives you a $50,000 maximum credit line, and you spend $5,000 from the credit line to buy new equipment, you’ll then have $45,000 credit line until you pay back the $5,000. You’ll only pay interest on the $5,000 you spent.

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Bank of America Business Line of Credit Options

The Bank of America Secured Business Line of Credit

A Bank of America Secured Business Line of Credit is a line of credit that requires your business to offer collateral in exchange for the credit line. This collateral mitigates the risk that Bank of America takes on by extending your business a line of credit.

Collateral for the secured Bank of America business line of credit can come in many shapes and size, including equipment, real estate, and the business itself. No matter what it is, though, the collateral you offer will need to be of equal value to the maximum credit line amount given to you by the lender.

If you’re worried about potentially offering up your valuables for in exchange for a credit line, just know that doing so will result in lower, more stable interest rates and higher credit maximums. In fact, secured Bank of America business lines of credit are typically only available to those seeking credit lines greater than $100,000.

    Qualifying for the Bank of America Secured Business Line of Credit

    Getting your hands on a secured Bank of America business line of credit is fairly simple. According to Bank of America, business financing requires:

    • 2 years of business history
    • $250,000 in annual revenue

    Bank of America Secured Business Line of Credit Terms

    The terms of the credit line—such as the maximum line amount and interest rates—will be determined by various factors, including your business’s overall creditworthiness and relationship to Bank of America.

    Bank of America does, however, advertise that the line of credit rates on their secured product can dip as low as 5.50%.

    Having a previous banking relationship with Bank of America, especially a positive one, can seriously improve your credit line terms and get you close to that minimum interest rate. In fact, Bank of America now offers a formalized relationship advantages in the form of interest rate discounts.

    Applying for the Bank of America Secured Business Line of Credit

    Unfortunately, you can’t apply for a secured Bank of America business line of credit online.

    You’ll have to go through one of their business lending specialists over the phone or in person at one of Bank of America’s brick-and-mortar locations.

    Bank of America will require the following information about your business in its application for a secured business line of credit:

    • Name
    • Business street address (no PO Boxes) and date moved to current address
    • Phone number
    • Tax ID
    • Nature of business
    • Date the business was established
    • Business acquisition date of current ownership
    • Number of employees
    • Annual net profit
    • Annual gross sales
    • List of outstanding obligations, if any (list should include lender, current loan balance or credit limit, and monthly payment)

    They will also require ID information about each business owner, guarantor and controlling manager.

The Bank of America Unsecured Business Line of Credit

Your second Bank of America business line of credit option is their unsecured business line of credit. An unsecured business line of credit is a line of credit for which your business is not required to provide collateral.

The unsecured version of the Bank of America business line of credit will best serve businesses seeking credit limits ranging from $10,000 to $100,000.

Keep in mind that, in the event that you can’t pay an unsecured business line of credit, the bank may seize your personal assets if your business cannot come up with the funds itself.

This is why a secured line of credit is a good option if you can provide the collateral—this way you’ll at least have a say what the bank seizes, instead of leaving it up in the air.

    Qualifying for a Bank of America Unsecured Business Line of Credit

    To qualify for the unsecured Bank of America business line of credit, you’ll need to check off the following boxes:

    • Personal credit of 670 or higher
    • 2 years of business history
    • $100,000 in annual revenue

    Bank of America Unsecured Business Line of Credit Terms

    Again, the terms of your Bank of America business line of credit will rely heavily on your business and personal finances, but having a pre-existing relationship with Bank of America will help improve those terms.

    That said, Bank of America is currently running a promotional offer for the unsecured Bank of America business line of credit. If you get your application in before the end of 2018, and you qualify for the Bank of America line of credit, you could access a 2.99% fixed rate for your first 12 billing cycles.

    Additionally, Bank of America will give you a $50 credit if you set up autopay for your line of credit payments. Keep in mind that this will be debited to your origination fee, which is $150 to begin with, and $100 with the credit.

    Applying for a Bank of America Unsecured Business Line of Credit

    Unsecured business credit lines through Bank of America require the same information needed for secured lines of credit.

    However, the biggest—and best—difference is that you can apply for an unsecured credit line online through Bank of America if you already bank with them.

    Of course, you are still welcome to speak with their business lending specialists by phone or in person if you need assistance or help making the right choice for your business.

How Bank of America Business Line of Credit Interest Rates Are Calculated

As mentioned, Bank of America will determine your maximum credit amount and your interest rate based on your overall creditworthiness and your prior relationship to Bank of America.

But what does that actually mean?

Let’s pick apart the criteria that goes into determining Bank of America business line of credit interest rates:

Relationship With Bank of America

For your relationship to Bank of America, ask yourself these questions:

  • Do you or have you used Bank of America services in the past, such as opening a checking account or savings account?
  • Have you received a loan from Bank of America before?
  • If so, were you a reliable borrower? In other words, did you pay off the loan on time and make timely payments?

If you answered yes to some or all of these questions, that’ll be a plus for you in Bank of America’s eyes.

Plus, they have now formalized their relationship benefits with their Relationship Rewards program. The three levels of this program—Gold, Platinum, and Platinum Honors—offer a ladder of interest rate discounts of up to 0.75%.

Creditworthiness

Bank of America does only requires that you have at least a 670 personal credit score. However, as always, the better your credit score, the better the financing you will receive.

However, they will look to other financial credentials to determine your business’s creditworthiness, as well. That’s where all of the documentation they ask for comes in.

They’ll want to confirm your business’s cash flow, industry, staying-power, and spending habits (among many other things) to get a bigger picture of your business’s financial stability.

Ultimately, Bank of America business lines of credit will go to applicants that Bank of America deems creditworthy, or, in other words, not too risky to lend to.

What You Can Use a Bank of America Business Line of Credit For

How to Use a Line of Credit

A business line of credit can be used for a variety of purposes, but it is primarily a good financing option for businesses that want to fulfill short-term financing needs.

These include but are not limited to:

    Cash flow shortages

    If your business finds itself a little strapped for cash, a line of credit is a good way ensure you have the funds you need to keep your business going. Cash flow shortages can be due to a variety of reasons—unpaid invoices from clients, a dip in sales, etc.

    Getting through slow seasons

    If your business has a high and low season for sales, a business line of credit is a good way to ensure you have the cash to keep your business running without depleting your reserves entirely.

    Payroll

    Business lines of credit actually give you access to cash that you can use to pay your employees in the short term.

    Inventory

    Inventory purchases are a great use case for business credit lines, because ostensible you will be able to pay back the purchase plus interest once that inventory gets sold.

    Emergencies

    Business lines of credit a good move to prepare for emergencies. If some essential equipment breaks that you need to run your business, it could take weeks to secure a term loan. A business line of credit could give you access to cash to rent or make a purchase immediately.

    Increasing your credit score

    Lines of credit through big bank like Bank of America, which will report to credit agencies, is a great way to increase your credit score by making on-time payments on small purchases.

    These are just a few options. Of course, there some things that business credit lines are not good for.

What You Shouldn’t Use a Bank of America Business Line of Credit For

Business lines of credit are typically not ideal for large purchases on which you’ll have to pay a lot of interest.

This is because business lines of credit tend to have higher interest rates than term loans.

So, if you need to make a large purchase, it’s better to look into medium or long-term loan options before resorting to your business credit line. Another good option in this scenario would be a Bank of America SBA loan.

If you’re unsure whether a business line of credit can meet your needs, be sure to speak with a business lending professional to determine which financing option is right for your business.

And Bank of America has their own business lending specialists on hand to help out as well.

Why Go to Bank of America For a Business Line of Credit?

Bank of America is the second largest bank in the United States, with over $2 Billion in assets.

They’ve put this position to good use with customer service availability and flexible financing options with competitive interest rates.

They have a history of lending to small businesses, and rank highly among other banks in terms of amount of capital lent to small businesses.

Depending on how big of a credit line your want or need for your business will determine whether you should apply for secured or unsecured credit lines—luckily, Bank of America offers both of these options. So, even if you’re unsure whether or not you want to secure your business line of credit with collateral, you can look to Bank of America for stellar, sustained funding.

Of course, it’s always important to compare your loan options with other banks and online lenders before going with your first option. If a business line of credit is right for you, try checking out what lines of credit other banks have to offer. Chase business lines of credit, Wells Fargo business lines of credit, and Capital One business lines of credit are similar products.

Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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