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Banks are best suited for small business loans if your business has been operating for more than a year and does not need money. Approvals can take months and are far from a sure thing, even with good credit.
Banks That Give Business Loans
Banks only approve about 15% of business loan applications, according to the latest data from the Biz2Credit Small Business Lending Index.
First Come, First Served: Banks Open The Lending Window And Small Businesses Rush In
Biz2Credit. Biz2Credit Small Business Lending Index™ August 2022. Accessed on September 15, 2022. See all sources. This means that the right bank for you not only offers the type of business loan you need, but also offers enough credit to make financing possible.
Here are the best banks for small business loans based on their commercial and industrial loan volume and product offerings, as well as alternative options to consider.
Bank of America had the most commercial and industrial loans among banks in March 2022 - surpassing the nearest lender by about $122 billion, according to S&P Global Market Intelligence.
S&P Global Market Intelligence. Top 25 US Banks by C&I Lending 1 in 22 Accessed on September 15, 2022. See all sources.
Pros And Cons Of Taking Small Business Loans From Banks
Bank of America business loans are a good option if you value rewards. By meeting certain account requirements, you can receive discounted interest rates, no bank transfer fees and other benefits. Bank of America can also make sense for veterans and service members, offering them a 25% discount on loan servicing or origination fees.
Term loans Bank of America offers long-term fixed-rate, unsecured loans. The secured loan requires a higher annual income: $250,000 versus $100,000 for the unsecured option. But it offers higher loan limits (up to $250,000) and a potentially lower interest rate. Both business loans require a minimum of two years in business and can have repayment terms of up to five years, which is lower than what other banks can offer.
Business lines of credit. Bank of America also offers secured and unsecured lines of credit with the same income terms as its term loans. Secured lines of credit come with additional borrowing capacity — starting at $25,000, compared to $10,000 for the unsecured option. There is no loan limit. Both have revolving terms, meaning you use the money as needed, which renews each year.
SBA loan. Bank of America is a Small Business Administration lender, but is less active in making SBA loans. For example, Wells Fargo and US Bank offer more 7(a) loans.
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US Small Business Administration. 7(a) and 504 donor report. Accessed on September 15, 2022. View all resources - The most common type of SBA financing.
Other business loans. Bank of America offers business auto loans starting at $10,000. The bank also has commercial real estate loans and equipment loans, both starting at $25,000.
Chase offers a variety of products to small business owners, including checking accounts, credit cards and payment solutions. Chase business loans include:
Term loans Chase offers fixed-rate, adjustable-rate loans starting at $5,000, which is less than lenders like Bank of America or PNC Bank. The payback period can last from one to seven years.
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Business lines of credit. Chase has business and commercial lines of credit. Its line of business offers financing from $10,000 to $500,000 over a five-year renewable term. The commercial line is over $500,000, renewable for one to two years.
SBA loan. Chase is an SBA lender and funds many types of SBA loans. This includes SBA Express loans and lines of credit, which offer faster financing up to $500,000.
Other business loans. Chase offers commercial real estate loans starting at $50,000 with fixed or variable rates. Terms are available up to age 25. Chase also allows you to pay off the loan on a standard repayment schedule, or pay it off with a balloon payment at the end of the term.
Citibank may be best known among entrepreneurs for their small business credit cards. But the bank also offers business loans, albeit with fewer products than other lenders. You might prefer that simplicity, but it means you'll want to consider other lenders if Citi doesn't advertise the type of loan you want.
Business Loan Considerations That You Must Know
Term loans Citibank term loans range from $5,000 to $5 million. The interest rates are fixed, the terms last seven years and the loans require a personal guarantee. Citi does not offer equipment loans, but term loans can be used for this purpose.
Business lines of credit. Citibank offers two lines of business, with amounts ranging from $10,000 to $5 million. Both lines have variable interest rates and revolving terms and require a personal guarantee.
Wells Fargo offers many types of SBA loans and lines of credit, however, its loan maximum is lower than some banks; so consider other options if you have collateral and need more than $500,000 in financing.
Business lines of credit. Wells Fargo has three different lines of credit - two unsecured and one secured - ranging from $5,000 to $500,000. Lines of credit up to $100,000 have variable rates and are revolving. Those over $100,000 have a one-year term. Typically, you'll need at least $2 million to $5 million in annual sales to qualify for Wells Fargo's more generous line of business. Fees vary by product.
Apply Hdfc Bank Business Loan
SBA loan. Wells Fargo is one of the most active SBA lenders. As of September 2022, it had approved more than $377 million in SBA 7(a) loans in fiscal year 2022 - the most among large national banks.
Other business loans. Wells Fargo offers semi truck financing, commercial real estate purchase loans and equity financing, as well as products specific to starting or buying a medical practice.
PNC business loans are best for more mature businesses. In general, you need to be in business for at least three years to qualify, which is longer than what other banks require.
Term loans PNC offers $20,000 to $100,000 in unsecured loans and $100,001 to $3 million in secured loans. Unsecured loans come with a fixed interest rate and terms of five years, while rates for secured loans can be fixed or variable and terms can be as long as seven years.
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Business lines of credit. PNC's line of credit amounts reflect the bank's term loans, unsecured options ranging from $20,000 to $100,000 and secured options ranging from $100,001 to $3 million. Both have variable interest rates and revolving terms. An unsecured line has an annual fee of $175, and a secured line charges 0.25% of the amount drawn.
SBA loan. PNC is an SBA preferred lender, but the bank is less active than others that make these loans. As of September 2022, PNC approved just over 400 SBA 7(a) loans, compared to Wells Fargo and US Bank, which each approved more than 1,800.
Other business loans. PNC business vehicle loans range from $10,000 to $250,000 with repayment terms of up to six years. Commercial real estate bank loans have fixed or variable interest rates, repayment terms of up to 15 years (with up to 25 years amortization), and financing amounts from $100,001 to $3 million.
US Bank has fewer locations than other brick-and-mortar banks, including Bank of America and Wells Fargo. But if there's a branch near you, US Bank can be a good choice for startups, which may qualify for certain products for businesses less than a year old.
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Term loans US Bank offers fixed-rate, guaranteed-term loans up to $1 million. It also offers a quick business term loan, which has a lower maximum loan ($250,000) but a faster application process. The quick loan can be secured or unsecured and offers repayment terms of up to seven years. This product can be a good choice for new businesses as you only need a minimum of six months of business to apply.
Business lines of credit. The US Bank's line of business also reaches $1 million and is interest-only. The bank's revolving line of credit, called CashFlow Manager, goes up to $250,000 and is for businesses that have been in business for at least two years. This product has an annual fee of $150 if the credit line is less than $50,000.
SBA loan. US Bank can be another good option if you are looking for an SBA loan. As of September 2022, it had approved nearly 1,800 7(a) loan applications in FY2022. You may also be eligible for an SBA loan from US Bank.
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