Are HSBC Business Loans Right for You?
HSBC Bank is one of the world’s largest banks, but as a U.K.-headquartered institution, HSBC doesn’t have quite the same presence in the United States as it does abroad—in fact, the bank only operates branches in 10 states and Washington, D.C. But their new service, HSBC Fusion, might be a draw for American business owners in the market for business loans (or HSBC Bank business loans, in particular).
In short, HSBC Fusion makes it easier for small business owners to oversee their personal and business finances by providing customers with a single platform and staff member to manage both accounts at the same time. Also through HSBC Fusion, small business owners can apply for three types of HSBC bank business loans, along with a few other financial products like business credit cards and bank accounts.
Let’s go into greater detail both about HSBC’s new SMB-centric service and HSBC bank business loans in particular.
What Is HSBC Fusion?
We often stress the benefits of maintaining your personal and business bank accounts with the same institution. For one, banks value loyalty, so conducting both your personal and business banking at the same place may increase your odds of securing a loan with them when you’re ready to take on business debt. Beyond that, it’s simply easier to stay on top of your global finances if you’re not toggling back and forth between locations (both physical and digital).
The goal of HSBC Fusion is to integrate personal and business financial management within the same bank. The service has already launched in certain countries internationally but has recently become available to HSBC clients in the United States.
HSBC Fusion allows small business owners who do both their personal and business banking with HSBC to easily access and maintain both accounts on the same platform. Clients are given a single point of contact to manage their personal and business finances, whom they can connect with at a physical branch location, over the phone, through HSBC Fusion’s digital platform, or via their 24-hour secure messaging system. Among other features, HSBC Fusion gives small to medium-sized business owners access to business credit cards, total balance recognition, side-by-side views of their personal and business bank accounts, and applications to HSBC Bank business loans.
To become an HSBC Fusion client, you’ll need to call, book an appointment, then go to a physical HSBC branch. Clearly, if you don’t live in one of the 10 states (plus D.C.) that HSBC serves, you’ll need to search for a bank with a location that’s convenient for you; as you likely know from your personal financial management, most banks require that you visit a branch in-person to sign up for their services or apply for a business loan.
HSBC Business Loans
HSBC Fusion is the bank’s small-business financing portal; through this service, small business owners who are clients of the bank can apply for three types of business loans. Let’s go through them.
Lines of Credit
As a reminder, business lines of credit are flexible financial resources. While the bank will give you access to a predetermined amount of funds, you’re not beholden to using and repaying all (or any) of that amount. Rather, you can dip into your line of credit whenever you need to, in whatever amount you need, and you’re only responsible for repaying what you’ve used, plus interest. After you’ve repaid the full amount of your loan, your line of credit will replenish to its original amount.
That makes lines of credit ideal financial solutions for almost any short-term working capital need: Update your inventory, launch a comprehensive marketing campaign, patch up unforeseen emergencies, or jump on sudden opportunities.
HSBC’s business lines of credit have a variable rate, which is determined by adding a spread to the HSBC Prime Rate.
HSBC also offers term loans in their suite of financial products for small business owners. Term loans are good options for small business owners who need to finance a large, planned expense—as opposed to the several, smaller expenses that a line of credit can cover.
HSBC’s term loans have fixed interest rates, which means your rate will remain consistent over the life of the loan. HSBC also says that they’ll offer flexible repayment terms to work with the business’s cash flow.
As an SBA participating lender, HSBC can also offer approved borrowers SBA loans.
As you might already know, SBA loans are disbursed by intermediary lenders, such as HSBC, but they’re backed by the government. That means that if the borrower defaults on their loan payments, then the U.S. Small Business Administration guarantees that the lender will receive the majority of the defaulted loan amount.
Because their risk is lessened, banks are more inclined to offer SBA loans to borrowers whom they might not have otherwise approved for a traditional bank loan. And through any of the several SBA loan programs, banks can offer borrowers SBA loans at very low interest rates, high loan amounts, and generous repayment terms.
Which is not to say that getting approved for an SBA loan is easy. These loans are highly competitive, so banks and the SBA can pick and choose among a huge pool of applicants, and they’ll still choose the businesses that can reliably repay their debt.
In addition to hitting every SBA loan eligibility standard, you’ll need to complete a comprehensive (and time-consuming) SBA loan application. Ostensibly, however, your bank advisor can help walk you through this lengthy application process.
Benefits of Becoming an HSBC Fusion Client
Every business bank loan’s rates and terms will differ depending on the applicant’s financials, so we can’t tell you exactly what your hypothetical HSBC Bank business loan might look like. But we can say that, if you’re approved, your bank loan will have some of the lowest interest rates, highest loan amounts, and longest terms you’ll find on the market.
Whether you’re approved for an HSBC Bank business loan or not, you can still take advantage of HSBC Fusion’s other financial products for small business owners, including:
- Business checking and savings accounts
- Business CDs
- Business debit and credit cards
- Merchant services
- Accounts payable
- Accounts receivable
They also provide specialized services to help small business owners manage, plan, and protect their companies, including key insurance agents, succession planning, and escrow accounts and IOLAs (Interest on Lawyer Accounts) for certain types of businesses.
Drawbacks of Working With HSBC Bank
First off, you should know that securing a business loan with any bank is difficult, and HSBC is probably no different. Because they issue such high loan amounts, banks need to mitigate risk at every possible turn. Stringent approval criteria is how they weed out the businesses they deem riskiest.
Generally, to be approved for a bank loan, you’ll need excellent personal and business credit scores, to have been in business for several years, and to show evidence of profitability. Altogether, these stats (and others)—which your bank will determine based off the information provided in your business loan application—give your lender a sense of whether you’re able to repay your debt in full and on time. You’ll also likely be required to put up collateral to secure your bank loan.
HSBC Bank Reviews
Before placing your money with any bank, do your due diligence on the institution. Read up on the bank’s website to make sure that their products and services align with your business’s financial needs, and cross-reference with other institutions’ offerings. It’s also a good idea to ask around your network, and talk to other business owners who bank with the institution so you can get a sense of their customer service.
Read user reviews, too. Understand that any online reviews should be taken with a grain of salt, as extreme subjectivity is obviously inherent to the practice—still, though, cross-referencing review sites can give you a gist of how the bank operates in the real world.
HSBC Fusion reviews aren’t yet available online; and as a U.K.-headquartered bank, most online reviews are from U.K. customers. That said, HSBC bank’s personal banking services have received less-than-stellar reviews across the board. In particular, reviewers cite poor customer service, glitchy digital platforms, and problems with HSBC credit cards as major disadvantages of working with the bank.
Should You Apply for an HSBC Bank Business Loan?
To recap, HSBC Fusion makes it easy for small business owners to manage both their personal and business finances concurrently (while keeping them separate). In addition to HSBC Bank business loans, HSBC Fusion offers clients business credit cards, bank accounts, and money management services.
As we mentioned, you’ll need to call, book an appointment, then visit your local HSBC branch to become an HSBC Fusion client. And when you’re ready to take on debt, you’ll need to revisit the bank in person to apply for an HSBC Bank business loan.
While we can’t say for sure which documents HSBC will request for your loan application, do be prepared to provide at least the following information:
- Business loan request letter
- Bank statements
- Personal and business tax returns
- Profit & loss statements
- Balance sheets
- Your personal income
- Personal credit score
- Annual revenue
- Time in business
- A business plan
- Industry type
Just to reiterate, though, being a bank customer doesn’t necessarily make you a shoo-in for business loan approval. Although 26% business loan approval rates from banks are higher than they have been in several years, that still leaves almost three-quarters of applying business owners in the lurch.
But that certainly doesn’t mean those business owners are out of options. If your HSBC Bank business loan application was turned down, consider a line of credit or term loan from an online lender. These lenders were formed exactly to serve those business owners whom banks rejected, so their eligibility and approval requirement are much less stringent.
It may not be the case that you’ll receive terms as favorable as those you’d find from your HSBC Bank business loan (or a business loan from another bank). But after applying, comparing, and evaluating your loan offers, you can find a financial solution that makes sense for your business.