Bank of America Review: Small Business Loans & Lines Of Credit
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- Date Established
- Charlotte, NC
- High borrowing amounts
- Multiple types of financing available
- Rates tend to be inexpensive
- Long-term financing options available
- Borrower qualifications might be hard to meet
- Financing isn’t available in some states
- The application process is slow and involved
- Funds can take awhile to disburse
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 with the cost of fairly conservative lending practices and standards. Should you get a loan from Bank of America? It depends on your 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 Loan Products Offered
- Business Term Loans: Traditional loans that provide the borrower with a lump sum of money. That amount, plus interest, is paid off over time.
- Lines Of Credit: Accounts that let you draw money as you need it, up to a credit limit. You pay interest on the amount you owe.
- SBA Loans: Loans that are guaranteed by the SBA and designed to help small businesses access rates and terms they may not otherwise be able to.
- Commercial Lending: A term describing the ability to use hard collateral to activate financing streams. Terms may vary by lender and from borrower to borrower.
- Healthcare Practice Loans: These are specialized term loans for the healthcare industry.
To have a good chance of qualifying for business financing from Bank of America, the bank recommends that you meet the following minimum requirements:
|Time In Business:||2 years|
|Business Revenue:||$100,000 per year (for an unsecured loan)
$250,000 per year (for a secured loan)
|Personal Credit Score:||670|
More broadly, Bank of America uses what it calls “The 5 C’s of Credit” to assess borrower qualifications. These are:
- Capacity: Your ability to service your debt. Bank of America wants to see at least $1.25 in income for every $1 you borrow.
- Capital: Do you have capital assets, such as cash and equipment? Who has invested in your company?
- Collateral: Do you have assets that you can use as collateral (accounts receivable, inventory, cash, equipment, commercial real estate)?
- Conditions: What are the current economic conditions? What’s the state of your industry? What’s the regulatory environment like?
- Character: What’s your work history? Your industry experience? What do people think of you?
The bank also values communication, so building up a relationship with your local branch may make a difference in some cases.
Learn more about the 5 C’s of Credit, and how to improve your standing in each area, in our explainer.
Terms & Fees
Bank of America offers a variety of secured and unsecured loan products to potential business customers.
Business Advantage Term Loan
The Business Advantage Term Loan is an unsecured loan product that offers qualified businesses lump sums between $10K and $100K and with term lengths from 12-60 months.
This product is designed to get working capital into the hands of businesses without the need for collateral. Interest rates begin at 5%, with payments made monthly.
It’s worth noting that this product is unusually fast for a bank loan; you can get your funds within five days after approval.
Secured Business Loan
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 (starting at 4.25% rather than 5%). Term lengths can last up to five years.
Because they’re slower to process, but with better terms, a secured business loan would be more appropriate for expansion projects than working capital.
Business Advantage Credit Line
Bank of America’s Business Advantage Credit Line is an unsecured line of credit, with limits of up to $100K. It’s a revolving line of credit, so whenever you pay down your balance, you’ll make that much credit available again. No interest gets charged until you use the funds.
Most businesses will use an unsecured line of credit to bridge the gap between payables and receivables or as a rainy day fund. Just remember, you have to renew your line of credit annually if you want to keep it active.
Secured Line Of Credit
Securing your line of credit with a blanket lien on your assets or a Bank of America CD will allow you to access more money at slightly better rates. Credit limits begin at $25K and have no upper limit. Otherwise, your secured line of credit will function more or less the same as an unsecured credit line would.
Because of the higher limit and better terms (but slower approval process), you’d probably use this product for ongoing operational expenses rather than short-term gaps.
Bank of America offers specialized secured loans to businesses looking to financing equipment. These loans come with lower interest rates (starting at 3.75%) but must be used to purchase qualified assets, such as heavy equipment, office machinery, etc. These loans last up to five years and in amounts starting at $25K.
Bank of America also offers equipment leases.
Commercial Real Estate Loans
If you’re looking to buy commercial property and/or land, you’ll probably want a long-term loan. Commercial real estate loans through Bank of America begin at $25K, with interest rates starting at 3.75%. These loans last for up to 10 years with balloon payments (your payments are back-loaded) or 15 years with full amortization.
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 complicated than it would be for most other loans since you’ll be dealing with two organizations instead of only the bank.
Expect to make a down payment of around 10% as well as provide assets or real estate for collateral for a 7(a) loan. 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.
Unsure whether an SBA 7(a) or 504 loan would be a better fit for your funding needs? Learn about the differences in our comparison.
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, offering convenience where possible and a more traditional application process where it isn’t.
What You Need To Apply For A Business Loan From Bank Of America
There’s some variability, depending on the state you’re based in, but here’s what you’ll definitely need to apply:
- Personal info for each owner, guarantor, and controlling manager
- Business street address (no PO Boxes)
- Time at the current business address
- Phone number
- Tax ID
- Nature of business
- The date your business was established
- The date you acquired the business
- Number of employees
- Annual net profit
- Annual gross sales
- List of outstanding debt obligations
How Long Does The Application & Funding Process Take?
Short answer: it depends on the product you’re applying for.
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 all goes according to plan, you can get your funds as soon as five days after being approved. For a bank, that’s lightning-fast.
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. In this case, there’s no time frame advertised, but you should expect a minimum of a couple of weeks to go by before you see your funds (and possibly months in the case of SBA loans).
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 such as 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 5,400 complaints and a 1-star rating from over 300 reviews. From sources such as Consumer Affairs and similar aggregators, complaints include:
- Customer Service: Most complaints involved customer service and inconsistent responses to complaints and problems, such as frozen accounts.
- 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 an extensive 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. In particular, Bank of America’s transparency and modern approval processes help distinguish it from some of its other big-name competitors.
As well-established and protected as the bank might 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.