Bank of America Business Loans: Every Option You Need to Know

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What Every Business Loan Bank of America Offers

Bank of America is one of the most well-known banks in the world—with good reason. They are everywhere, with over 4,700 banking centers and 16,000 ATMS.

But while you may be familiar with Bank of America’s consumer offers and programs, as a business owner, it’s important to know that they are also one of the best banks for business loans. Business loans from Bank of America are some of the most prevalent on the market.

Why Choose a Business Loan from Bank of America?

Bank of America lends to around 3 million small businesses through their various programs—the second largest small business lender in the competition after Wells Fargo.

If you can qualify for Bank of America business loans—also referred to as Bank of America commercial loans—they have some of the best rates for small businesses available. This makes them an excellent financial decision for your business.

Due to their size, they also have a wide variety of business loans that can fit various needs for your business. If you’re on the market for a small business loan, particularly a Bank of America small business loan, there is definitely more than one option to consider.

Types of Bank of America Loans

Bank of America Business Loans Option #1: Business Line of Credit

A line of credit functions much like a credit card in that you only pay interest on the amount you use. In this case, Bank of America would extend your business a line of credit for a certain amount, and you could borrow up the limit of that credit line.

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.

    Why a Line of Credit?

    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. This is known as a “revolving” line of credit.

    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.

    How the Bank of America Business Line of Credit Works

    Bank of America lines of credit, you have two options: secured and unsecured lines of credit.

    Secured lines of credit are more “secure” for the lender because they often require a set of collateral when the loan is negotiated to ensure that if the borrower can’t pay off the loan, the lender can just take the agreed on collateral.

    Unsecured lines of credit, by contrast, are good options for a business that doesn’t have collateral, as it won’t be required. However, this means that the APR will be higher, and your personal assets–any of them—could be seized if you default on the loan.

    It’s easier to secure an Unsecured Business Line of Credit if you are looking to borrow $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 a Bank of America Business Line of Credit Will Cost You

    Though you are only responsible for what you spend on the line of credit, you will pay interest on that amount.

    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.

    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 Business 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.

Bank of America Business Loans Option #2: Secured Business Loan

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

    Why a Bank of America Secured Business Loan?

    Bank of America Secured Business Loans come at what is considered a “competitive rate,” meaning it’ll be some of the best rates and cheapest options out there.

    How Bank of America Secured Business Loans Work

    These loans start 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 “secure,” meaning 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 a Bank of America Secured Business Loan Will 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.

Bank of America Business Loans Option #3: Equipment Financing

Equipment financing is the use of a loan or lease to purchase or borrow hard assets for your business. This type of financing might be used to purchase or borrow any physical asset, such a restaurant oven or company car. Equipment loans are a good idea for large purchases that may put too much strain on your reserves.

    Why Bank of America Equipment Financing?

    Before you put a dent in your cash flow by paying out-of-pocket for a large equipment purchase, consider equipment financing with Bank of America instead. This Bank of America small business loan option will provide business owners with the capital necessary to avoid the equipment they need to grow their business.

    How Bank of America Equipment Financing Works

    Before you put a dent in your cash flow by paying out-of-pocket for a large equipment purchase, 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 five years on your loan.

    What Bank of America Equipment Financing Will Cost You

    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 business loans. You’ll get a 0% interest rate for the first six 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 Financing

    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.

Bank of America Business Loans Option #4: SBA Loans

SBA loans are small-business loans guaranteed by the SBA and issued by participating lenders, mostly banks. The SBA can guarantee up to 85% of loans of $150,000 or less and 75% of loans of more than $150,000. The agency says its average loan amount was about $375,000 in 2016.

    Why Bank of America SBA Loans?

    Bank of America is what’s called a “Preferred SBA Lender.” This means that Bank of America is a seasoned veteran 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.

    How Bank of America SBA Loans Work

    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.

    What Bank of America Business SBA Loans Will Cost You

    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 a Bank of America SBA loan 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.

Bank of America Business Loans Option #5: Business Credit Cards

A business credit card is a credit card intended for use by a business rather than for an individual’s personal use. Business credit cards are available to businesses of all sizes, including sole proprietorships, and they don’t show up on the cardholder’s individual credit reports or affect an individual’s credit scores.

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 the Bank of America Business Credit Card?

    You might not expect to see business credit cards on the list of Bank of America small business loans. But financing your business with a Bank of America business credit card might be the smartest move for your business.

    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 Bank of America small business credit card could be a better fit.

    Plus, you might not love the idea of securing one of the Bank of America 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.)

    How the Bank of America Business Credit Cards Work

    A Bank of America business credit card will work just like a consumer card, but it will provide rewards and perks specific to business needs. The top three Bank of America business credit cards will offer cash back, travel rewards, or competitive APRs, allowing you to access whatever features you prefer, while spending with unsecured, rotating credit.

    What Bank of America Business Credit Cards Will Cost You

    It will depend on the card you get and the interest rate applied, but Bank of America ensures that they are competitive. Be sure to compare different options–some may have higher fees than others. The best Bank of America business credit cards won’t come with an annual fee, so keep that in mind as you’re deciding on which Bank of America business loan you want to access

    The Bottom Line on Bank of America Business Credit Cards

    If you don’t need access to large amounts of capital, then a Bank of America business credit card might be the perfect contingency plan to a small business loan. Most Bank of America business credit cards come without annual fees and will reward you for your spending, so they could even beat out other Bank of America business loan options from the get-go.

Qualifying for the Best Business Loan Bank of America Offers

For borrowers to qualify for Bank of America small business loans, they’ll need to meet Bank of America’s five C’s of credit. Consider these to be general guidelines for any type of financing you would seek from Bank of America.

    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 business loans require collateral—unsecured lines of credit or business credit cards, for example—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

    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 all about finances for 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.

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

    That’s why it’s important that when you applying for a Bank of America small business loan, pay careful 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.

    Remember to include your time in business as part of your business plan. Bank of America only lends to businesses who have operated for at least 2 years.

    Communication

    Bank of America’s unspoken sixth “C” of credit comes is as important for you as it is for them:

    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. Bank of America wants to see that you’re willing to communicate openly about your business’s opportunity and challenges, which will make for an altogether better business plan anyway.

How to Apply for a Bank of America Business Loan

Unfortunately, Bank of America doesn’t offer online applications, so you’ll have to call one of their small business specialists on the phone or visit them in person at a Bank of America center.

But before you do that, it’s important to know all that will be asked of you.

    Required Business Information

    Here’s the business information the Bank of America business loan application will 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)

    Required Personal Information

    The Bank of America small business loan application will also require a bit of personal information:

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

Can a Bank of America Business Loan Address Your Needs?

The straight answer to this question? It depends.

The best business loan for you is the one that fits your financing needs and that you can qualify for. If you qualify for any of these small business loans through Bank of America, it’s important to get comparative offers from multiple lenders. Chase business loans and American Express small business loans are other bank options to consider.

Unless you have a long-standing relationship with a Bank of America lender, in which case, it’s unlikely a competitor will be able to give you as good of a rate.

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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