Bank Of America Business Loans Review
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- Date Established
- Charlotte, NC
- Suited for small to large businesses
- Low interest rates
- Few additional fees
- Stringent borrower qualifications
- Poor public reputation
Bank of America, based in Charlotte, NC, is the second largest bank in the United States (by assets) and is one of the largest companies in the world with over 4,400 financial centers and around 16,000 ATMs.
As one of the biggest banks around, Bank of America offers a large, versatile breadth of loan products at competitive rates, but at the cost of fairly conservative lending practices and standards. Should you get a loan from Bank of America? It depends on your individual situation. But if you can qualify, and don’t mind the bank’s ongoing theater of scandals, you may find Bank of America well-suited to meet your needs. Read on for more information.
Table of Contents
Business Lending Products
Below are the qualifications for Bank of America loans. Generally speaking, the bank will also want you to have at least $1.25 of income for every $1 debt you take on.
|Time In Business:||2 years|
|Personal Credit Score:||670|
|Revenue:||$100,000 per year (for unsecured products)|
$250,000 per year (for secured products)
Terms & Fees
Bank of America offers a variety of secured and unsecured loan products to potential business customers.
These are the terms and fees for Bank of America’s Business Advantage Term Loan (an unsecured business loan) and for Bank of America’s secured business loans:
|Borrowing Amount:||$10,000 - $100,000 (unsecured)|
|Term Length:||1 - 5 years|
|Interest Rate:||Starts at 6.25% (unsecured)|
Starts at 5% (secured)
|Origination Fee:||$150 (unsecured)|
|Collateral:||Business assets or CD (secured)|
Term loans are usually what people think of when they imagine a bank loan. Term loans last a few years, accrue interest over time, and are paid monthly. Pretty simple, right?
Bank of America’s term loans come in two forms: secured and unsecured. Secured loans use either an asset or Bank of America CD as collateral. They are a bit harder and more time-consuming to qualify for, but the collateral allows you to borrow more than you could with an unsecured loan, and often at a lower interest rate.
Bank of America sometimes offers promotions that will waive a portion of your fees, as well as the ability to lower your interest rates through its Business Advantage Relationship Rewards program.
Lines Of Credit
These are the terms and fees for Bank of American unsecured and secured lines of credit:
|Borrowing Amount:||$10,000 - $100,000 (unsecured)|
|Term Length:||1 year with annual renewal|
|Interest Rate:||Starts at 7% (unsecured)|
Starts at 6% (secured)
|Annual Fee:||$150 (unsecured)|
$150, $250, or 0.5% (secured)
|Collateral:||Blanket lien or CD (secured)|
Revolving lines of credit combine some of the features of a business loan with those of a credit card. Rather than borrowing a chunk of money, you’ll instead establish a credit line that you can draw upon repeatedly, up to your credit limit. You only make payments on the credit that you’ve used.
If this sounds like a credit card, it’s because the two are very similar. To make a big generalization, whereas you’d probably use your credit card to make lots of small purchases and pay them off quickly, you’d use your line of credit to make a smaller number of large purchases and pay them off over time. So while lines of credit aren’t usually quite as convenient to draw on (though some are, especially if they’re linked to a card), they tend to have much lower interest rates.
What’s the catch? Lines of credit can be tricky to qualify for and you’ll have to renew them each year, paying the associated fee each time.
Bank of America offers lines of credit in both secured and unsecured forms. Securing your line with a blanket lien on your assets or a CD will allow you to access more money at slightly better rates. The annual fee starts at $150 for unsecured lines and for secured lines up to $100,000. Secured lines between $100,000 and $250,000 cost $250 annually. Above that, the fee is 0.5% of your line amount.
Lines of credit qualify for Bank of America’s Business Advantage Relationship Rewards program.
These are the terms and fees for Bank of America’s SBA loans:
|Borrowing Amount:||$350,000 - $5 million (7(a) loans)|
$350,000+ (504 loans)
|Term Length:||Max 7, 10, or 25 years (7(a) loans)|
7 - 10 years (504 equipment loans)
10 - 20 years (504 real estate loans)
|Interest Rate:||Less than Prime + 4.25% (7(a) loans)|
Unknown (504 loans)
|Origination Fee:||0% - 3.5% (SBA fee)|
Unknown (bank fees)
|Collateral:||Varies by product|
Small businesses can also apply for loans from Bank of America through the SBA’s 7(a) or 504 programs. These loans are partially guaranteed by the SBA, allowing businesses that may otherwise encounter a tough lending market to get credit at reasonable rates and terms. Just be aware that the process is a little more complex than it would be for most other loans since you’ll be dealing with two organizations instead of just the bank.
Expect to have to make a down payment of around 10 percent for a 7(a) loan, as well as provide assets or real estate for collateral. The length of SBA loans will vary depending on what you’re applying the money to. For example, 7(a) loans can last up to seven years for working capital, 10 years for equipment purchases, and 25 years for real estate.
Some big banks are very traditional, requiring customers to apply in person. Others have taken the more modern approach of allowing you to apply online. Bank of America effectively splits the difference.
Existing customers of the bank can use their Bank of America ID to apply for unsecured loans and lines of credit via an online form. You’ll need to submit basic information about yourself and your business, as well as your number of employees, profits, sales, and outstanding obligations. You’ll also need to submit personal information about each additional business owner, guarantor, and controlling manager.
Depending on the product, you may need to have a business checking account with Bank of America if auto-debiting is required.
If you’re not a current customer and you’re applying for a secured loan or line of credit, you’ll need to apply in person at your local branch or over the phone.
Bank of America has branches in most states but is not very prevalent in some (including a few populous ones). Bank of America’s presence in Ohio, for example, is limited to a couple of lonely ATMs in Cincinnati and Woodmere. You can use the bank’s locator to see if there’s a branch near you.
Sales & Advertising Transparency
Given the size of the bank, Bank of America’s website is fairly informative and easy to use. A big point in the company’s favor is the addition (and convenient placement) of tools like sliders in its business loan sections that help you figure out what your monthly payments will be.
Overall, the bank is fairly transparent upfront, although you may have to squint a bit to find some of the terms (or the links to them).
Customer Service & Technical Support
As is the case with most banks of this size, your customer experience may be extremely variable depending on your product and the branch you’re doing business with. That said, there’s no shortage of negative customer experiences online, most of which are related to checking and savings accounts.
Negative Reviews & Complaints
As mentioned above, big banks aren’t hitting it out of the park in the public relations department these days, and they have the customer reviews to show for it. Keep in mind that most of these complaints aren’t about Bank of America’s business loans specifically, but about the company in general.
At the time of this review, the bank’s Better Business Bureau profile shows over 5,700 complaints and a 1-star rating from over 200 reviews. From sources like Consumer Affairs and similar aggregators, complaints include:
- Customer Service: Most complaints involved customer service and inconsistent responses to complaints and problems like accounts being frozen.
- Fees: This was mostly related to checking accounts, but many customers complained about unexpectedly being charged punishing fees.
- Scandal-Prone: Like many other big banks, Bank of America was among those responsible for the 2008 crash and has had subsequent issues including overcharging overdraft fees and allegedly underreporting risk metrics.
Positive Reviews & Testimonials
Bank of America tends to fare better with reviews from professional sources, and there are some customers leaving positive reviews on the aforementioned aggregators:
- Good Rates: Though harder to qualify for, Bank of America does offer good rates to business customers on loans and lines of credit.
- Accessibility: Bank of America branches are prolific and easy to find in most of the country’s major population centers, with a few glaring exceptions.
- Versatility: Bank of America has a large menu of loan products available in both secured and unsecured forms, giving businesses a lot of options.
Bank of America, like many of its peers, can offer qualified businesses a broad array of products at low rates. Whether or not you and your business have the credit rating necessary to qualify is another question.
As well-established and protected as the bank may be, it’s hard to ignore Bank of America’s frequent legal and consumer issues. If you have an existing relationship with Bank of America and are satisfied with it, then it’s probably a good choice for your lending needs. Prospective customers may want to weigh their options and do some comparison shopping.
Looking for a loan or line of credit and want an alternative to Bank of America? See how the company compares to other bank lenders.
Don’t qualify for a bank loan? To evaluate multiple low-interest lenders at once, it’s a good idea to use a free loan matchmaking service, often called a “loan aggregator.”
Merchant Maverick has partnered with Lendio (read our review) to offer one such service: the Merchant Maverick Community of Lenders. By filling out one application, you can be matched to multiple potential lenders. Check your eligibility below.
• Free loan aggregation service; requirements vary by area and lender.
Learn more about the Community of Lenders
Business Loan Rating Criteria.