What Are the Best Banks for Small Business Loans?
There’s been a resurgence in bank lending to small businesses. Large banks now approve a quarter of small business loan applications, and regional and community banks approve nearly one half of small business loan applications. If you’re in the market for a loan from a bank, here are some great banks to start with:
The Best Banks for Conventional Business Loans
If you’ve used a few different banks for your personal finances, or have switched your business checking account from bank to bank, then you know that not all banks are created equal.
Some banks have a national reach with thousands of branches nationwide, while others are smaller, regional or community banks. In addition, banks differ in the types of loans they provide, their application process and timeline, the interest rates and repayments schedules they offer, and their customer service.
In order of decreasing size, here are the best banks for business loans.
1. Wells Fargo
Wells Fargo calls themselves “America’s leading small business lender,” and if you look at their track record, that rings true. With a variety of different financing solutions and years of experience in the small business lending space, Wells Fargo is a great bank to work with if you need financing.
As of December 31, 2019, Wells Fargo had a balance of more than $515 billion in commercial loans.
Wells Fargo offers several different types of business loans, but for small business owners, Wells Fargo’s Unsecured Business Loan and Unsecured Business Line of Credit are the best options. Unsecured means you don’t need to supply collateral for the loan, making these Wells Fargo business loans easier to qualify for.
Best Option: Wells Fargo Unsecured Business Loan
The Wells Fargo Unsecured Business Loan is a fixed-rate, medium-term loan providing between $10,000 and $100,000 in capital. The terms range from one to five years, and interest rates range from 7% to 22.99%, depending on your eligibility. The interest rates are fixed too, which means your monthly payments stay the same throughout the life of the loan.
This loan is an unsecured business loan—meaning that, unlike most bank loans, you won’t have to put down any collateral to secure the loan.
If you’re like many business owners looking for quick business loans, the Wells Fargo Unsecured Business Loan can meet your expectations: The application is a simple one-pager online, and the bank can approve your application instantly and get the funds in your bank account the next business day.
Best Option: Wells Fargo Unsecured Business Line of Credit
The next product for you to consider is the Wells Fargo Unsecured Business Line of Credit. With this financing product, you get a revolving credit line of $5,000 to $100,000 to use for cash flow problems or covering unexpected expenses. Since the credit line is revolving, the line replenishes every time you pay back the balance in full.
This product might be slightly harder to qualify for compared to the unsecured term loan, but you get lower rates—typically the prime rate plus 1.75%.
This line of credit is also an unsecured financing option. Even better, Wells Fargo offers rewards points when you use your line of credit, almost like a credit card.
2. Bank of America
Bank of America is another bank that is going to great lengths to gain the loyalty of small business owners. At the end of 2019, Bank of America had $307 billion in outstanding U.S. commercial loans.
With roughly 4,400 branches and strong mobile banking capabilities, Bank of America is a great option for small business owners throughout the country. Bank of America business loans are a fantastic option for highly qualified borrowers.
Best Option: Bank of America Business Advantage Unsecured Term Loans
Like Wells Fargo, Bank of America also offers unsecured term loans. The loan amounts range from $10,000 to $100,000, and the rates are fixed, starting at 5.50%. These rates beat Wells Fargo’s best rate. These are medium-term loans, with repayment terms ranging from one to five years.
You can apply online, in person at a branch, or over the phone. If approved, you can receive funding is as few as five business days. However, Bank of America publishes the qualification requirements on their website. Eligible businesses are at least two years old, and they need to be generating $100,000 or more in annual revenues.
Bank of America has something called relationship rewards, where you can get a lower rate if you maintain high balances across your Bank of America accounts.
Best Option: Bank of America Business Advantage Unsecured Credit Line
Bank of America’s (BOA) unsecured business line of credit, called the Business Advantage Line of Credit, is similar to Wells Fargo’s version.
3. JPMorgan Chase
Next on our list is another large nationwide bank: JPMorgan Chase. In 2019, the bank loaned over $91 million in SBA loans alone.
Chase business loans makes our list of the best banks for business loans for two reasons. First, Chase offers a wide variety of lending options, from lines of credit and SBA loans to equipment financing and real estate financing. Second, Chase offers a great lineup of small business credit cards if traditional loans don’t make sense for your business.
Best Option: Chase Business Term Loan
The Chase Business Term Loan offers small business owners between $5,000 and $500,000 in financing with terms up to seven years and fixed monthly payments.
Payments can be automatically deducted from your Chase business account. These loans can come with either fixed or variable interest rates.
Best Option: Chase Business Credit Cards
A business credit card isn’t a traditional “business loan,” but you can often use a credit card like a loan. Plus, there are added benefits to business credit cards, such as rewards points, introductory interest rates, and an easier qualification process.
Chase is a leader in credit cards, and they offer one full year as an introductory rate on several of their cards before your variable rate sets in. In addition, Chase offers unlimited cash back on certain cards and sign on bonuses. For more info, read our comparison of the best business credit cards.
4. Capital One
Although Capital One is better known for their consumer programs, the bank has certainly invested in their small business lending program. In fact, in 2019 they granted over $20 million in SBA loans.
Capital One stands out as a great bank for business loans just based on the wide array business loans they offer their customers. Capital One offers lines of credit, equipment and vehicle financing, commercial real estate loans, business installment loans, and SBA loans (through the SBA 7(a) and 504 program).
Capital One small business loans also come with relationship-based rates for existing customers, and might also tailor a specific loan program to the financing needs of your business. That customizability makes Capital One the best bank for business loans if you already have a relationship with them.
Best Option: Capital One Working Capital Lines of Credit
Many bank loans in general are large, long-term loans that might be pretty inaccessible to most small business owners (or just beyond the amount of capital you really need).
However, Capital One’s working capital lines of credit stand out as a smaller, more flexible type of financing that could be easier to qualify for than, say, a Capital One SBA loan or real estate loan.
These business bank loans start at $10,000, and allow an unlimited number of draws. There’s no specific timeline for the line of credit repayment period, or for how long you can have the line of credit open. Plus, you won’t need to submit financial statements if you’re planning on taking out a line less than $50,000, making the application process really simple.
Capital One calls these loans perfect for business owners who need a flexible financing tool that can help smooth out every day cash flow issues. In order to qualify, you’ll need to have two years in business and have (or open) a Capital One business checking account.
5. U.S. Bank
U.S. Bank rounds out our list of the best national banks. This bank is one of the biggest lenders for small business loans ($83 million granted in SBA loans in 2019), but has limited geographic reach. U.S. Bank branches are only in 25 states and are concentrated in the west and midwest.
U.S. Bank business loans range from term loans, lines of credit, equipment finance, to commercial real estate loans. One thing that sets them apart is that they offer “practice financing,” which helps dentists, veterinarians, and eye doctors start a new practice, acquire a practice, or expand.
Best Option: US Bank Quick Loans for Business
One of U.S. Bank’s best products for small business owners is the Quick Loan for Business. This is for business owners who want to purchase new or used equipment or need a source of working capital for business expansion. The loans go up to $250,000, and the repayment term goes up to five years. The loan is called “quick” because the bank provides a simple application process and fast credit approval.
Compared to other banks, U.S. Bank has slightly easier qualification requirements for business loans. They only require you to be in business for six months to be eligible. Although the Quick Loan isn’t an unsecured loan, the loan is self-secured. This means the equipment or business assets that you purchase with the loan serve as collateral. You don’t need to provide additional collateral.
The Best Banks for SBA Loans
When talking about the best banks for business loans, we’d be remiss to not bring up the SBA loans.
SBA loans are an excellent financing option for small business owners. The Small Business Administration doesn’t actually give out these loans themselves. Instead, the SBA guarantees business loans that are issued by traditional banks.
An SBA guarantee (typically up to 85% of the loan value) has two major benefits: First, it mitigates the bank’s risk of lending to you. With the SBA’s guarantee that the bank gets at least most of their money back in case you default on your loan, the lender can be much more comfortable extending credit. Second, the guarantee makes SBA loans easier to qualify for as a business owner.
That’s not to say that qualifying for SBA loans is easy—these are still bank loans, and you need strong finances to qualify. But the added security by an external guarantee certainly incentivizes these banks to lend to small business owners.
Not only are SBA loans slightly easier to qualify for, they also come with equally affordable interest rates as most bank loans do. Interest rates on SBA loans from banking institutions range from about 5% to 9.5%.
Here’s the list of the best banks offering SBA loans.
1. Live Oak Bank
This bank, based in Wilmington, North Carolina, has no consumer loan products and no physical branches. Instead, they focus exclusively on small business loans, especially SBA loans. They’ve provided over $2 billion in small business funding since they started operating. Initially, Live Oak Bank made loans only to veterinary practices but now provides financing to a range of industries.
Live Oak Bank has a streamlined, electronic application process for their SBA loans, since they don’t rely on branches. You can upload all loan documentation online and monitor the progress of your loan at any time in your online account. All of this means your loan can get processed more quickly. Live Oak Bank also has a lot of expertise in different industries, so they can help you get a loan that’s perfect for your business.
2. Wells Fargo
Wells Fargo is another prolific SBA lender in the country, which is why they made our list of best banks for conventional loans and best banks for SBA loans. In 2019, Wells Fargo approved 692 SBA 7(a) loans and lent a total of $144,769,600 in 7(a) SBA loans.
Although Wells Fargo lends thousands of 7(a) loans, the bank also offers SBA 504 financing for business owners who want to purchase real estate, equipment, or other fixed assets. Since Wells Fargo is so experienced in providing SBA loans, they can underwrite and process your loan faster than usual. That’s good news because qualifying for an SBA loan is typically a drawn out process that can take several weeks, even months.
Banks have a bad reputation for providing only larger loans that are out of reach for small businesses. But Wells Fargo’s SBA loan average size was $83,799 in 2017, which indicates that they do make smaller loans perfect for small businesses.
3. Huntington National Bank
Huntington Bank participates in the SBA 7(a) general purpose business loan, SBA 504 loan, and SBA Express loan programs. So, no matter what the stage or needs of your business, you should be able to find something that works for you.
4. Celtic Bank
Celtic Bank is another excellent bank to consider for small business financing. Like Live Oak Bank, Celtic offers a completely online banking experience. They have a few consumer products, but their specialities are SBA loans and conventional business loans.
In 2019, Celtic Bank approved 142 SBA 7(a) loans, lending a total of $114,060,900. That ranked them sixth nationwide in SBA lending, but they were in the top three in several regions of the country. One of the best parts about Celtic Bank is that they have a very simple seven-question online application to get started. Once you complete that, Celtic Bank will predict whether you can get approved for the loan and offer you alternative loan options.
5. TD Bank
TD Bank business loans rounds out our list of the best banks for business loans. This bank mainly has an east coast presence, so if your business isn’t located there, then you might want to go with another bank.
TD Banks also offers all three types of SBA loans: SBA 7(a) loans, SBA 504 loans, and SBA Express loans. Unfortunately, they don’t offer the convenience of an online application process. You must schedule an appointment with a TD Bank branch to apply. But, they have been able to help many small business owners obtain loans. In 2019, TD Bank made 549 SBA 7(a) loans totaling $51,830,500.
How to Qualify for Banks Loans for Business
As we’ve mentioned a few times so far, bank loans have low interest rates, long terms, and manageable monthly payments—but they aren’t open to everyone. To qualify for a bank loan, you must have very strong personal and business finances. The qualifications that top small business loan providers will look to to determine your eligibility will be:
Good Personal Credit
Banks loans for business, surprisingly enough, will require a solid personal credit score. You might be wondering why your personal credit score even matters if you’re looking for a business loan. Business lenders—both business loan companies and banks alike—will look to business owners’ personal credit score to gauge their financial responsibility. After all, you’re the one who is controlling your business’s finances.
As a result, you—or any of your co-owners—will likely need to come to the table with a FICO score of at least 700 to be able to qualify for a business loan from one of these top providers. The top business loan providers might even look for excellent personal credit—think 750 or higher—for you to qualify. This is especially the case for newer or lower-volume small businesses.
Solid Business History
The best banks for business loans will have a minimum requirement for the time your business has been up and running. Generally speaking, most business bank loans will require you to have at least six months in business to even apply. Even then, you’ll need really solid business financial credentials and personal credit to be eligible for a bank loan for business.
At least two years in business will make your application for a small business loan from a bank even stronger. If your business has already lasted at least two years, then lending capital to it will be less risky for any bank you apply with.
High Annual Revenue
The best banks for business loans won’t lend your business any capital if they don’t think you’ll be able to pay it back. As a result, a business loan from a bank will only be available if your business is earning a solid amount of revenue on an annual basis. Most of the top business loan providers will look for at least $100,000 in annual revenue for you to be eligible. The more revenue you earn, the better.
Additionally, the top banks for small business loans will often prefer that your business be profitable. Make sure you meet all every revenue and profitability requirement for a given lender before you take the time to apply.
A Complete Business Loan Application
Along with these credentials, you should have a complete, organized business loan application to give the bank all the information they might need to approve your business loan.
Keep in mind, though, that what you need to prepare for your application to one of these best banks for business loans really depends on the specific bank you’re working with. Some banks might have additional business loan requirements. But in general, you can be confident that you need to prepare some version of the following list of documents:
- Personal background/résumé for anyone who owns 20% or more of the business
- Business plan
- Personal and business tax returns
- Financial statements
- Bank statements
- Use of loan
- Debt schedule
- Statement of collateral
- Legal documents (licenses, registrations, articles of incorporation, etc.)
The Bottom Line
Our list of the 10 best banks for business loans covers both conventional business funding options and SBA loans. But if you don’t qualify for a traditional business loan from a bank, those five alternative lenders are your next best option for finding affordable, quick, and easy capital to grow your business.
Use them to get the financing you need now, and borrow responsibly so you can qualify for one of the best banks for business loans in the future.