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Which Are The Best Banks For Small Business Loans In 2021?

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When people think of getting a loan for their small business, the first place they’re likely to think of is a bank, and with good reason.

Banks have deep pockets, offer the convenience of in-house checking and savings accounts, and usually have better rates than the alternative lending market.

Because you’re likely to encounter stricter credit requirements as well as geographic constraints, the best bank for your small business loan needs is often the one you’ve already built a relationship with. They know you as a customer and, wouldn’t you know it, already have access to your bank statements and records. It is possible, however, that you may be able to use the economy of scale offered by big national banks to get an even better deal, provided you can meet their stringent qualifications.

Unfortunately, if your credit is below 600 or your business hasn’t been around very long, you’ll likely have a hard time qualifying for a bank loan. But if you have a solid credit score and steady revenue, you’ll be able to take advantage of low rates, long repayment terms, and a variety of financial products including loans, business lines of credit, and business credit cards.

Keep reading to find out our top picks for the best banks that offer business loans.Β 

Learn More About Our Top Picks

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Easiest bank for business loans
Easiest bank for business loans

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Best bank for startups
Best bank for startups

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Overall best bank for small business loans
Overall best bank for small business loans

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Best bank for SBA loans
Best bank for SBA loans

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Best Big 4 alternative
Best Big 4 alternative

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Read more below to learn why we chose these options.

The Best Banks For Business Loans

When looking at the “best” banks for small business loans, we’re considering a combination of excellent rates and accessibility. One thing to note is you may very well be able to get a better deal from your local community bank or credit union. However, because the banks below are institutions that cover large portions of the country, there’s a high probability that at least one of them will be operating in your market or in your nearest major city.

1. Wells Fargo: Easiest Bank For Business Loans

Wells Fargo Business Loans



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Wells Fargo offers a number of financial products for small business owners. And with over 8,000 branches nationwide, it won’t be too difficult to find a location near you. Through Wells Fargo, you can apply for lines of credit up to $500,000, equipment loans and unsecured business loans up to $100,000, Small Business Association 7(a) loans up to $5 million, and commercial real estate loans, including the SBA 504 loan.

Not only does Wells Fargo have numerous financial products and locations, but it also offers an easy application process. While the process varies based on your chosen product, you can apply easily online for many of the bank’s loans and lines of credit without even leaving your home or office.

Pros

  • Multiple types of financing
  • Low rates
  • Easy online application process
  • Multiple branches nationwide

Cons

  • Strict credit requirements
  • Funds can take weeks to be disbursed

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2. Chase Bank: Best Bank For Startups

Chase Bank Business Loans



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What sets Chase apart from other banks is its low rates — some of the lowest in the industry — and its wide selection of financial products for small business owners. Chase has financing options for credit-worthy established businesses and startups. This includes lines of credit, long-term loans, and SBA loans like the 7(a) loan, 504 loan, and Express loans.

It’s important to note that while Chase is one of the largest banks in the nation, its loan application process is pretty traditional. In other words, you have to visit your local branch to apply for a small business loan. However, with over 5,000 branches nationwide, it shouldn’t be too difficult for most business owners to find a local branch to kickstart the loan application process.

Pros

  • Low-interest rates
  • Few extra fees
  • Multiple types of financing
  • Loans for startups & established businesses

Cons

  • Not available in all states
  • Strict credit requirements
  • Slow application process

Read our in-depth review

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3. U.S. Bank: Overall Best Bank For Small Business Loans

U.S. Bank Business Loans



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U.S. Bank stands out above its competitions for a number of reasons. First, the bank offers numerous financial products suitable for businesses of all sizes. This includes term loans up to $1 million, lines of credit up to $2 million, and SBA 7(a) and 504 loans. Borrowers will find that U.S. Bank offers competitive interest rates and few extra fees. Additionally, U.S. Bank offers good customer support and has an overall positive reputation among its customers.

As with other bank loans, qualifying is reserved for the most credit-worthy borrowers. Additionally, U.S. Bank doesn’t have quite as large a reach as others on this list, only serving 25 states. If you’re on the East Coast, you’ll need to find another lending option. However, if you’re in one of U.S. Bank’s service areas, this bank is one that’s well worth giving a try.

Pros

  • Multiple types of financing
  • Low-interest rates
  • Few extra fees
  • Good customer service & support

Cons

  • Strict credit requirements
  • Not available in all states

Read our in-depth review

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4. Bank Of America: Best Bank For SBA Loans

Bank Of America Business Loans



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Bank of America is an SBA Preferred Lender and offers a number of low-interest SBA loans to its customers. This includes the 7(a) loan, the 504 loan, and loans with reduced fees for veterans. This bank frequently tops the SBA’s most active lenders list and has loaned billions of dollars to eligible small business owners struggling through the coronavirus pandemic through the SBA’s Paycheck Protection Program. There are over 4,000 branch locations nationwide, making it easy and convenient to apply for funding.

If an SBA loan isn’t for you, Bank of America offers several other funding options. This includes secured and unsecured term loans and lines of credit, commercial auto loans, and commercial real estate loans.

Pros

  • Multiple types of financing
  • Low-interest rates
  • Good customer service & support

Cons

  • Not available in all states
  • Strict credit requirements
  • Slow application process

Read our in-depth review

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5. TD Bank: Best Big 4 Alternative

TD Bank Business Loans



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If you’re looking for an alternative to the Big 4 banks, look no further than TD Bank. While smaller than the other banks on this list, TD Bank is still large enough to provide loan options for businesses of all sizes.

Funding includes business term loans up to $1 million, lines of credit up to $500,000, and SBA 7(a) and 504 loans. Interest rates are extremely competitive, and there are few additional fees. In fact, there are no origination fees for business loans under $100,000.

TD Bank operates in 16 states, primarily states located on the East Coast. In addition to its wide breadth of financial products, TD Bank also has excellent customer service.

Pros

  • Excellent customer service
  • No origination fees on loans under $100K
  • Competitive interest rates

Cons

  • Not available in all states
  • Strict credit requirements

Read our in-depth review

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Types Of Business Loans Offered By Banks

As traditional lending institutions, banks usually offer a full spectrum of financial prospects to their customers. None of these are inherently “better” than any other, but they each come with their own sets of qualifications and terms that may make one product the superior choice for a specific business.

Term Loans

Term loans provide the borrower with a lump sum of money. You’ll then pay the amount you borrowed, called a principal, back over a timeframe called a term, plus interest. Banks usually deal in long and medium-term loans with terms longer than one year. Banks are less likely to deal with short-term loans, which work a bit differently.

Most banks offer both secured and unsecured loans. Secured loans are backed by collateral, typically an asset or a cash deposit. As a result, they usually have lower rates and higher borrowing limits than comparable unsecured loans.

Lines Of Credit

Where term loans grant you a lump sum, lines of credit instead give you the ability to borrow money up to your credit limit for a specified amount of time. Most lines of credit are revolving, meaning that you can reuse credit after you have paid it off.

Whereas term loans are used for working capital, expansions, and equipment, lines of credit are more often used for miscellaneous expenses or to smooth out a company’s cash flow. They can also provide a bit of security for unexpected expenses. Like term loans, lines of credit may be secured or unsecured.

Equipment Financing

Equipment loans are a type of secured term loan that is specifically for buying equipment for your company. They follow, more or less, the same rules as term loans, but the asset that you’re purchasing is used as security for the loan.

SBA Loans

Many banks offer SBA loans. These come in a variety of different forms, the most common being the SBA 7(a) loan and the SBA 504 loan. The SBA doesn’t originate loans, but it does provide a guarantee on loans offered through other institutions (such as banks), allowing businesses that wouldn’t otherwise qualify for financing to access capital at competitive rates and terms. Just be prepared for a longer application process.

How To Qualify For A Small Business Bank Loan

So you like what you see and want to work with a bank? Well, there’s a reason the alternative lending market exists, and it’s because getting a bank loan can be surprisingly challenging these days. If you want to maximize your chances of being approved, here are some things you can do.

Watch & Repair Your Credit

Traditional lenders care about traditional markers of trustworthiness, and that, unfortunately, means you’re going to need good credit. If your credit isn’t in the high 600s or better, most banks will be hesitant to take a risk on you.

Check your credit score via a free credit score site. And if your credit needs work, learn how to improve your score.

Have A Business Account With The Bank

If you don’t look like a fantastic borrower on paper, you can still build a relationship with your prospective bank by being a customer. Not only can this give you room to negotiate, but it will also make it easier to apply when you’re ready. Additionally, some banks will only lend to customers who have accounts with them, regardless of how good your credit is.

Watch Your Cash Flow

It should be obvious, but banks don’t want to lend to customers who are financially unable to pay back their loans. Formulae vary from bank to bank — for example, Wells Fargo likes to see $1.50 in revenue for every $1 you borrow — but you’ll want to make sure you have some margin for error for making your payments. Learn how to calculate your debt service coverage ratio (DSCR), so you can assess whether you’re a good candidate for a bank loan.

Have A Good Track Record As A Business Owner

Most banks will want to see that you’ve been able to keep a business afloat for a while. That means having been in business for two to three years, minimum. If you need help before that, you may want to look at alternative business lenders.

Have Documentation Ready

If you’re applying to the bank where you also have business accounts, you’ll save some labor here. However, you’ll still need to be ready to produce a host of documents (doubly so if you’re applying for an SBA loan). These are things such as tax returns, proof of business registration, personal identification, financial statements, collateral (if applicable), information on any other loans you might have, and your business plan.

Alternatives To Small Business Bank Loans: Online Lenders & Nonprofits

Have banks rejected you? Did you read the above section and are now worried you probably won’t qualify for a small business bank loan? Do you need money faster than most banks can deliver it? Are you just starting and need a cash infusion?

You’re not alone. In fact, there’s a large market for people like you.

How Online Lenders & Nonprofits Are Different From Banks

Since the Great Recession tightened lending standards a decade ago, an alternative online market has grown that’s focused on getting money to businesses with poorer qualifications. Banks themselves, or investors with an appetite for risk, usually finance these companies. They also tend to have much easier and quicker applications, making them appealing to businesses that need money immediately.

Of course, this comes with a trade-off. While the seedier alternative lenders tend to fail over time, you still want to enter the alternative market with caution. Even honest and transparent lenders will (probably) have higher rates than a bank would offer you. Your credit score will be less of a factor here, but still, the better your credit score is, the better the rates you can expect.

The other option is to look at programs offered by nonprofits. Of particular interest will be the loans provided by Community Development Financial Institutions (CDFIs). These may be banks, credit unions, loan funds, or even venture capitalists certified by the CDFI Fund. CDFIs are often open to new businesses — even most online lenders shy away from businesses that haven’t been around for at least six months — and usually have good interest rates, though not as good as those of banks. Just be prepared for a lengthy application process as you try to match your needs with those of existing programs.

Where To Find Online Lenders & Nonprofits

Online lenders are incredibly easy to find. In fact, it’s almost impossible not to stumble across them online. Finding the ones you want to work with, however, will probably take a little bit of research. Merchant Maverick can give you a head start with that; check out our best small business loans.

Nonprofits are a different ballgame. Most operate on a local rather than national level, so you may have to do some research to find the ones in your area. The easiest way to do this is to use the CDFI locator on the Opportunity Finance Network or CDFI Fund websites.

Small Business Bank Loan FAQs

How do I get a business loan from a bank?

To get a business loan from a bank, it’s important to first understand the requirements of the bank and determine if you meet those requirements. If requirements are met, you will need to follow the bank’s application process, which may be completed online or may require you to visit your local branch.

Which bank gives the lowest interest rate for small business loans?

The lowest interest rates for small business loans vary by financial product. While the top banks in the nation offer competitive rates, it’s possible you may find lower rates at your local small bank or credit union, so make sure to shop around.

Which banks offer business loans?

Most banks and credit unions offer business loans, although the types of products offered may vary. Make sure to compare your options to find the best products, rates, and terms for your business.

What is the best place to get a small business loan?

The best place to get a small business loan is a bank or financial institution that offers multiple products, low rates and fees, long terms, easy application processes, and good customer service and support. Start your search with your own bank, and make sure to compare your options to find the best fit.

Top Banks For Business Loans: Final Thoughts

You have as many potential bank loan options as you have banks operating in your area. That said, they can be tough nuts to crack, especially for businesses with less-than-perfect credit, or those that haven’t been in business very long. Businesses that can meet their qualifications and can wait out the slower application processes, on the other hand, should make banks their first stop for funding.

In Summary: The Best Banks For Business Loans

  1. Wells Fargo Business Loans: Easiest bank for business loans
  2. Chase Bank Business Loans: Best bank for startups
  3. U.S. Bank Business Loans: Overall best bank for small business loans
  4. Bank Of America Business Loans: Best bank for SBA loans
  5. TD Bank Business Loans: Best Big 4 alternative
Chris Motola

Chris Motola

Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    ERICA WONG

    Thank You for the list of Banks. It lessens my stress of having to call around and ask questions that you have provided.

      This comment refers to an earlier version of this post and may be outdated.

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