U.S. Bank Small Business Loans: What You Need to Know
With more than $450 billion in assets, U.S. Bank and its parent company U.S. Bancorp are household names for many and one of the best banks for business loans. What you might be surprised to learn is that this bank is very active in small business lending, as well. U.S. Bank regularly makes the list of most active SBA lenders and there are several types of U.S. Bank small business loans and business credit cards available too.
While there are many alternative lenders in the business loan space, bank loans still offer many advantages—among them long terms, low interest rates, and manageable payments. This guide will cover everything on the eligibility, cost, and terms for U.S. Bank business loans.
How to Qualify for U.S. Bank Small Business Loans
The first thing you should consider before applying for U.S. Bank small business loans is whether there is a location near you. U.S. Bank has a limited presence across the country, with 3,000 branches concentrated in 25 midwestern and western states. If your business is located outside U.S. Bank’s territory, then you’re not eligible to receive a business loan from them. Use U.S. Bank’s branch locator to find out if there’s a branch near you.
Qualifying for U.S. Bank business loans, similar to qualifying for any bank loan, is challenging. Only the best borrowers with high credit scores and high-revenue businesses usually end up qualifying. That said, U.S. Bank does offer a variety of loan products, so you might be able to find a loan that’s a good fit for you.
Beyond doing business in an area U.S. Bank serves, here are the general eligibility standards for U.S. Bank small business loans.
U.S. Bank Checking Account
This is an easy box to check off—you must have a U.S. Bank checking account to qualify for a loan. U.S. Bank deducts your loan payments from your bank account, so you need to have a checking account with them, preferably a business checking account.
Time in Business
Unlike most other banks, U.S. Bank will consider lending to businesses that have been operating for less than a year. Businesses that have been operating for six months or longer are eligible for some loan products, but not all.
Personal Credit Score
There’s no fixed credit score minimum for U.S. Bank small business loans, but you’ll probably need a FICO score of at least 650 to qualify. You also might not be eligible if you or your business has red flags, like recent bankruptcies, on your credit report.
Business’s Financial Standing
If you apply for U.S. Bank’s term loan, you’ll need to prove the financial strength of your business before you’re approved. That means you’ll need to have solid revenues and a clear path to profitability if you’re not yet profitable.
Strong Personal Finances
Lenders perceive small businesses as risky, so you should have strong personal and business finances to prove you can repay a loan. You, as well as all guarantors on the loan, will need to show personal financial statements and personal tax returns.
You should also know that, in order to secure a U.S. Bank small business loan, each person owning 20% or more of your business will need to sign a personal guarantee.
A personal guarantee is how lenders protect themselves from the risk that you might default on your loan. When you sign a personal guarantee, you agree to let the lender seize any of your business or personal assets to recoup their losses if you can’t pay them back.
Complete Guide to U.S. Bank Small Business Loan Products
Qualifying for U.S. Bank small business loans isn’t easy, but if you have the qualifications to get approved, you’ll need to decide which type of business loan to apply for.
U.S. Bank has four different types of small business loans that fall under the umbrella of a “business loan.” Other business lending products they offer include business lines of credit and commercial real estate loans.
Let’s look at U.S. Bank’s business loan products:
- Quick Loan
- Term Loan
- SBA Express Loan
- Equipment Finance Loan
Quick Loan for Business
A “Quick Loan” for business is essentially a short-term loan that you can use for equipment acquisition or as general working capital. The quick line of products at U.S. Bank offers simpler paperwork and faster underwriting than traditional bank loans, making this a good option for business owners who need financing but don’t have much time to wait for it.
Quick loans for business can be for as much as $250,000, and come with a maximum term of five years. You pay U.S. Bank back with fixed monthly payments.
Quick loans come at competitive fixed interest rates starting at just 5.99%. This is a lot lower compared to other short-term lenders, but you’ll need to secure the loan with equipment or general business assets.
A term loan is a type of small business loan that you’re probably familiar with already. With a term loan, you can get a certain amount of capital from the lender and pay back the money, with interest, over a fixed repayment schedule. The term loan product from U.S. Bank can go up to $1 million and come with fixed monthly payments at competitive fixed rates.
These can be used for general business needs, equipment or vehicle purchases, and the expansion of a business.
SBA Express Loan
The SBA Express loan product from U.S. Bank is your typical SBA loan, which means it is backed by the SBA. The processing is quicker with an SBA Express loan than it would be with a regular SBA loan, and there’s also reduced paperwork as well.
These loans can be used for large, one-time purchases, as well as working capital, vehicle and equipment purchases, and other business needs. Remember because it is still an SBA loan, it’ll likely be more difficult to qualify for.
Equipment Finance Loans
U.S. Bank can approve you for a term loan that finances up to 125% of the cost of your equipment when you include soft costs. Covering the soft costs means that in some cases they’ll also finance up to 25% of soft costs—like sales tax, shipping, software, training, maintenance, and installation.
There’s no limit to how many pieces of equipment you can finance, either. You just need to prove that all the equipment you’re financing generates revenue for your business.
U.S. Bank can approve you for up to $500,000 to meet your equipment financing needs. They also offer some flexibility with how you pay them back. You can choose a seasonal, monthly, quarterly, semi-annual, or annual repayment structure. You can even defer your first payment for 90 days. This flexibility is pretty unusual as far as bank loans go.
Another great feature of these equipment loans? If you’re applying for equipment financing of $250,000 or less, the application is just one page, and you can get an approval decision within hours.
Lines of Credit
U.S. Bank offers three types of business lines of credit, all of which offer more flexibility than a term loan. A line of credit gives you access to a pool of funds that you can tap into whenever you need or want to for your business. But you’ll only pay interest on what you draw from your account, not on any untapped funds.
Lines of credit are great financing products for business owners who want to stabilize their cash flow or want a safety net to pay for emergencies or unexpected costs. The three U.S. Bank lines of credit that are available to businesses are:
- Cash flow manager line of credit
- Business equity line of credit
- Business line of credit
Cash Flow Manager Line of Credit
With lines up to $250,000, the cash flow manager line of credit might be the most suitable option for small businesses that have been operating for at least two years.
This line of credit is well-suited for borrowers who need quick access to short-term financing to cover any kind of business need—operating expenses, inventory purchases, or growth opportunities.
The rate on this product is variable, but you can lock in a fixed rate in some cases depending on the repayment term and your qualifications as a borrower. You don’t have to do the heavy lifting to repay what you draw from your credit line. U.S. Bank takes minimum payments directly from your business checking account. And this is a revolving credit line, so once you’ve paid back U.S. Bank in full, your credit line will reset to its original amount.
The cash flow manager line of credit is a fast option for getting business capital. There isn’t much paperwork, and the bank can even approve you the very same day that you apply.
Business Equity Line of Credit
With the business equity line of credit, borrowers leverage the equity of their commercial real estate for line of credit financing. If approved, you can borrow up to $500,000 against the value of your commercial real estate. U.S. Bank will only approve borrowers for a maximum five-year term, and during that term they’ll have a first or second position lien of up to 75% of your property’s value.
The business equity line of credit is designed for established small businesses. You must have been operating for at least two years, you have to own commercial real estate, and you have to bring in more than $1 million in annual business revenue to qualify.
If you qualify, the line of credit will be available to you for five years, with a balloon payment due at the end. This means you will make interest-only payments over the course of the five-year term, and then you’ll have to pay all the remaining principal at the end of the term in one big payment.
Business Line of Credit
For small businesses that need a large line of credit, U.S. Bank’s business line of credit might be a good fit.
Borrowers can be approved for a business line of credit for up to $500,000. If you choose to apply for this product, you should know that you’ll have to secure the credit line by receivables or inventory. Since the line of credit is secured, you’ll have a higher credit limit and a lower interest rate.
As you can probably imagine, a business line of credit is the hardest one to qualify for. You’ll need to have a very strong credit rating and business financials. You’ll also need to have been in business for more than two years.
Out of all the U.S. Bank commercial loans, the bank’s SBA lending program is probably the most well known. U.S. Bank is among the best SBA lenders in the country, funding over 2,750 SBA loans totaling over $423 million as of 2019. U.S. Bank is also part of the SBA’s Preferred Lender Program, enabling a faster underwriting and closing process. So if you can score an SBA loan from U.S. Bank, you can be confident that they know what they’re doing.
SBA loans are government-guaranteed loans that provide funding for a wide range of business purposes. The Small Business Administration doesn’t provide the funds for an SBA loan itself. Instead, the government institution guarantees loans funded by other lenders, such as U.S. Bank. By guaranteeing a portion of the loan, the SBA encourages lenders to approve small business owners who lenders wouldn’t otherwise work with. We already went over the details of the SBA Express loan above, but U.S. Bank offers three other types of SBA loans:
- SBA 7(a) business loans
- SBA 7(a) real estate loans
- SBA 504 real estate loans
SBA 7(a) Business Loans
The SBA 7(a) loan program is a catch-all financing product for small business owners. These loans can be used for almost any business purpose.
SBA 7(a) loans go up to $5 million in capital. The term that you’ll have on a 7(a) loan from U.S. Bank will depend on what you’re using the funds for. If you need a 7(a) loan for business acquisition, equipment purchases, debt refinancing, or real estate improvements, U.S. Bank will most likely set a term of 10 years on your loan. If you need a 7(a) loan for working capital or inventory, U.S. Bank will usually give you a seven-year term.
U.S. Bank will set an interest rate for your loan, but SBA loan rates but can’t go over maximums set by the SBA. You’ll need to collateralize this loan with business or personal assets.
SBA 7(a) Real Estate Loans
Just like the traditional SBA 7(a) loans, these loans are backed by the SBA but are specifically for purchasing, doing construction on, or refinancing commercial real estate for your business.
The amount goes up to $5 million and the loans have terms up to 25 years and in some cases, there is an additional $2 million in direct funding from U.S. Bank available. These loans fully amortize and there’s no balloon payment like some of your other financing options might come with.
SBA 504 Real Estate Loan
Whereas 7(a) loans are for general business needs, an SBA 504/CDC loan is a much more specific financing product. Borrowers can only use these loans for major fixed asset purchases. These loans help you finance the steep price tags that come on equipment or owner-occupied real estate.
If you do need to finance a major asset purchase for your business, a 504/CDC loan could be a good fit—U.S. Bank can approve you for a 504 loan of up to $11.25 million at a 10- to 25-year term.
SBA 504 loans have very low, fixed interest rates, even lower than 7(a) loans, which makes for manageable monthly payments. But you’ll need to provide a down payment of at least 10% of the loan amount.
Other U.S. Bank Financing Options
Most small business owners should be able to find a loan product that works for them from the options we’ve covered so far, but there are other products as well.
Here are some additional financing options from U.S. Bank.
U.S. Bank has practice financing tailored specifically for dentists, veterinarians, and eye doctors looking to purchase or buy into a professional practice.
Commercial Real Estate Loans
You can use SBA 504 loans to purchase owner-occupied commercial real estate, but U.S. Bank also has non-SBA loan options for this purpose, including owner-occupied commercial loans and investment property loans.
Business Credit Cards
If none of the traditional loan options work for you, you can always try a business credit card from U.S. Bank, many of which come with rewards perks and 0% introductory APRs.
While not a traditional business loan, business credit cards can help you finance smaller purchases for your business. And in the case of a 0% introductory APR credit card, you can carry a balance for a set amount of months without accruing interest—almost like an interest-free loan. Just keep in mind, once the introductory period ends a variable APR will set in, so make sure you have a plan to pay off the balance before then.
The Bottom Line
U.S. Bank business loans have affordable interest rates and favorable terms. If you’re a more established small business owner—with significant time in business, a stellar credit score, and strong revenues—U.S. Bank’s term loans, lines of credit, or equipment financing could be a good match.
But newer businesses or business owners with lower credit scores might have difficulty qualifying. The best way to find out if you qualify is to contact your local U.S. Bank branch. And don’t forget to compare bank loans to other types of financing before committing to a business loan.
Try checking out business loans from other banks as well. Some options you may want to explore include: