Bank of America business loans: 2023 review
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At a glance
| Overall Score | 4.3 |
|---|---|
| Overview | Bank of America is a national lender with a wide variety of business loan options. Most loans are better suited for established businesses with $20,000 or more deposited in eligible accounts, but it also offers a cash-secured line of credit to help businesses who want to build credit. |
| Loan amount: | Starting at $10,000 |
| APR: | As low as 5.50% |
| Term lengths: | 6 months to 15 years |
| Minimum credit score: | Not stated |
Who Bank of America is best for
Bank of America is best for business owners who already do the majority of their banking with it. The lender offers interest rate discounts, rewards and other benefits to Preferred Rewards for Business members with eligible Bank of America or Merrill business accounts. The higher your balance, the greater the rewards.
But even if you don’t have an account with Bank of America, it may still be a good choice. Since it offers a variety of loans and lines of credit, businesses that meet its minimum requirements can build business credit and will likely even score interest rates far lower than rates offered by alternative lenders.
Veterans who need small business loans may also want to take special notice: Some Bank of America business loans offer fee discounts of 25 percent to veterans of the U.S. Armed Forces.
Who Bank of America may not be best for
Newer businesses may want to shop elsewhere. Only the cash secured line of credit has a relatively low minimum revenue requirement and minimum time in business of six months.
Bank of America won’t be the best fit for small business owners who need fast business loans. If you don’t already bank with Bank of America, most loan products require you to set an appointment by phone or in person. And once approved, funding time is likely slower than what many online lenders offer.
Bank of America pros and cons
PROS
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Variety of financing options
Low interest rates
Free business credit report
CONS
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Slow application process
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Not as accessible to borrowers
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Limited eligibility requirements online
Business loan types offered
Bank of America offers a variety of business loan types that suit businesses of most sizes — including some small businesses that have only been open for six months.SBA loans
Bank of America is a Small Business Administration (SBA) preferred lender. Because of this, it can streamline your application and offer a simplified and faster SBA loan process compared to other SBA lenders.
In general, SBA loans are competitive and may be more difficult to qualify for, but they are open to many types of businesses, including sole proprietorships and limited liability companies (LLCs). They’re typically cheaper and pose less risk than other term loans. Since there are a variety of loan products under the SBA loan program, you should do your research to find the right option before you apply.Unsecured lines of credit
The unsecured business line of credit offered by Bank of America is a good option for businesses that need flexible funding. Like all lines of credit, your business will only pay interest on the amount it uses. The line renews every year, and you can access your funds any time without paying a cash advance fee, which is a feature other lenders may not offer.Secured lines of credit
Bank of America’s secured lines of credit have slightly more strict eligibility requirements than some of its other financing options. Your business will need to meet a minimum annual revenue of $250,000 to qualify. If it does, you will have access to a low starting rate.
This line of credit has upfront and annual renewal fees: $150 for credit lines of up to $100,000; $250 for lines above $100,000 and up to $250,000 and a 0.50 percent fee on the line amount for credit lines above $250,000.
Cash secured lines of credit
The Cash Secured line of credit is the only option Bank of America offers for newer businesses. Provided you have at least $50,000 in annual revenue and a $1,000 security deposit, your business could qualify. After two years in business and with an annual revenue of $100,000, your business will be eligible to switch to an unsecured business line of credit.
This option is designed to help small business owners build business credit rather than access funds. The security deposit you make acts as your line of credit. There is an annual fee of $150, and if you decide to close your account, you simply need to pay off your balance. Once the account is closed, the security deposit will be refunded.Secured term loans
If your business has valuable assets or a certificate of deposit (CD), it may qualify for a secured business loan. Bank of America offers a competitive interest rate for loans — starting at 6.50 percent. Just be prepared to borrow a larger loan and pay an origination fee of 0.50 percent of the total amount financed — which means a fee of at least $125 when you borrow.Unsecured term loans
Bank of America also offers unsecured business loans if your business does not have — or can’t afford to risk — an asset. Like Bank of America’s other loan products, rates are competitive and much lower than what many online lenders offer. But there is an origination fee of $150 if approved.Equipment loans
Bank of America offers equipment loans to finance large purchases necessary for your business, including office and construction equipment and semi trucks. Loan terms go up to five years if secured by business assets, and interest rates are competitive. But there is a 0.50 percent fee on top of the amount financed, which could be a significant cost depending on the size of your loan.Additional loans
Here’s a look at even more loan options available through Bank of America.
- Auto loans. If your business needs to invest in one vehicle or a fleet of vehicles, Bank of America has financing. You can borrow $10,000 with terms of 48 to 72 months for business-related transportation.
- Commercial real estate loans. Much like Bank of America’s other secured loan options, you can borrow at least $25,000 for commercial real estate. Interest starts at a low 5.50 percent, and terms last anywhere from 10 to 15 years.
- Health care practice loans. Bank of America also offers loans specifically for doctors, dentists and veterinarians.
Do you qualify?
At minimum, most businesses will need to meet three requirements:
- At least two years in business
- At least $100,000 in annual revenue
- Personal credit score of 670+
Some loans may have different requirements, such as an annual revenue of $250,000. Other limitations — like how you can spend loan funds and which industries qualify — are not stated directly by Bank of America.
What we like and what we don’t like
Bank of America is one of the best small business lenders, especially if you want low rates and to monitor your progress as you build credit. But it won’t be a good fit for everyone.
What we like
- Variety of financing options. Bank of America has lines of credit and term loans — all of which can be either secured or unsecured. This allows your business to find the right fit for its financing needs.
- Low rates. Bank of America’s starting interest rates are low and can go even lower if you are a Preferred Rewards member.
- Free business credit report. When you borrow from Bank of America, you will receive a free business credit report to help you track how your business is doing.
What we don't like
- Slow application process. Most loans require you to apply in person at a Bank of America branch or over the phone if you don’t already have a Bank of America Online Banking ID. For faster loans with online applications, you’ll need to look elsewhere.
- Not as accessible to all borrowers. Like banks and other traditional lenders, Bank of America doesn’t provide many options for business owners who need bad credit business loans. Plus, most loans have a minimum time in business of two years, which won’t work for startups.
- Limited eligibility requirements online. Bank of America doesn’t show certain specific requirements for loans, such as minimum required credit score or maximum interest rates.
How to apply for a loan with Bank of America
Bank of America allows current account holders to log in and apply directly online. If your business does not already have an account, you will need to schedule an appointment with one of Bank of America’s small business specialists.
To get a business loan from Bank of America, you will need to provide a few basic pieces of information about your business, including:
- Legal business name
- Business tax ID number
- Annual revenue
- Annual profit before tax
- Personal income, date of birth and Social Security number
Other information will be required based on your business and the type of loan you want to apply for.Bank of America FAQs
How Bankrate rates Bank of America
Overall Score 4.3 Accessibility 3.9 Business owners with poor credit or a need for fast loans may find better options elsewhere. Affordability 4.1 Annual fees and the lack of information on maximum rates take a bite out of this lender’s score. Transparency 4.5 Bank of America leaves some key details off its website, like specific minimum credit scores for each loan. Customer experience 4.4 A quick online application for all applicants could help improve the lender’s score in this category. Flexibility 4.6 Multiple loan types and perks like free business credit score help make this lender an appealing option. Methodology
To select the top small business lenders, Bankrate considers more than 20 factors. These factors include loan amounts, approval and funding times, credit requirements, APR or factor rate ranges, fees, and easy-to-find rate and fee disclosures. Bankrate reviewed more than 20 lenders and gave each a rating, which consists of five categories:
- Accessibility: Factors considered in this category include minimum loan amounts, approval and funding speed, minimum annual revenue and minimum credit score.
- Affordability: This section measures interest or factor rates and fees.
- Transparency: How easy it is to find important rates, fees and eligibility requirements are considered in this category.
- Customer experience: Customer service hours, online applications and app availability are considered in this category.
- Flexibility: This category considers factors like the number of loan products and ability to change payment due date.
Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.