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Bank of America Small Business Loan Review

Anne Miller

Anne Miller

Senior Author

Anne Miller

Senior Author

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Those who run small businesses understand how difficult it can be to grow and expand a company, and if you want to take your business to the next level, you might be wondering whether a small business loan from the Bank of America can help.

Although many people have already used this option with positive results, you will want to learn as much as you can about this bank so that you can make the best possible choice for your unique circumstances and the nature of your particular small business. After reviewing the following information, you will know the best ways to use a loan from the Bank of America, but you will also gain insight on what it can do for your business. The goal is to allow you to move forward with confidence, and you can then get the most from your effort.

Moreover, Bank of America offers a few different options for small businesses in need of capital. These include a revolving line of credit, secured business loans, SBA loans, and other options for qualified borrowers. Therefore, if you choose Bank of America for your small business lender, then you should also make sure you are choosing the best Bank of America small business financial product for your business’s needs. We’ll take a look at all of the different options for BoA borrowers in this review.

Small Business Loan Requirements

Before you invest time and energy into the application process, you will want to review the requirements that the Bank of America expects you to meet. You will need to have been running your small business for at least two years to have a chance of getting accepted. So if you are looking for a way to finance a new business, this option won’t be a good fit. On the other hand, those who need a way to buy extra equipment, obtain resources or expand to a new location won’t want to miss the benefits of this small business loan. Once you have determined that you are eligible to borrow the money, you are ready to take the next step.

Bank of America doesn’t have many other requirements explicitly detailed on their website, but that doesn’t mean you should assume there aren’t any further requirements. Talk to your local Bank of America branch to find out information about minimum credit scores, cash flow or revenue requirements, and other limitations and restrictions on small business loans from Bank of America.

Application Process

Bank of America Small Business Loan ReviewGetting started with the application process is a little time-consuming, but it's not complicated. The loan officer will want to know the type of business you run, the number of employees you have and your projected profitability. But this finance company will also take a look at your current obligations to get a clear picture of your dependability. Rushing through the paperwork, people often make mistakes or skip important sections, but doing so creates unneeded delays that can hold you back. To avoid waiting even longer for your money, ensure that you fill out each document completely and accurately.

Revolving Line of Credit

When you get a small business loan from the Bank of America, you can opt for a revolving line of credit. This option allows you to use the funds when you need them, and your lender will only charge interest on the money that you use. A revolving credit account is ideal for covering the operational expenses of your small business. You can choose to repay the debt at the end of the month, or you can make payments over time to reduce the impact on your budget. You will not need to worry about unexpected expenses, and if you have a slow month, you can count on your credit line to keep your business running smoothly.

Bank of America recommends their revolving line of credit for businesses that need less than $50k in cash. A revolving line of credit from Bank of America comes in the form of a credit card that you can use to make purchases or take cash advances from in order to cover expenses that you can’t use a credit card for, like payroll.

Secured Business Loan

If you need to borrow money to make a significant investment, getting a secured business loan might be a good fit for your situation. When you choose this path, you can secure the funds with your business assets, making it easy to get money when you need it.

A secured business loan might seem scary to some small business owners, as you have to put your assets on the line to cover your loan, but owners and operators should consider the benefits that a secured business loan provides. Because the loan is secured by collateral assets, the interest rates and fees that you are charged are going to be lower, as the loan is less risky for the bank providing the funds. This means that the overall cost of the loan will be less for you. Moreover, as long as you pay your loan back, the assets you put up for collateral won’t be at risk.

Length of Process

When you need to borrow money for any reason, the amount of time that it will take for you to get your hands on the funds is a critical factor that you should not overlook. If you fill out the paperwork correctly, you will probably get the funds within seven business days. When you need to get money instantly, you might have better luck using a different lending option.

Customer Service

The type of customer service that you will get from any lender is a vital piece of the puzzle when it comes to the success of your small business. You will want to choose a company that cares about you and your mission. According to most people who have used this company, the Bank of America is dedicated to providing all of its customers with outstanding support, and a member of the staff will be happy to answer your questions and to address your concerns.

Your Options

There are several loan options for small businesses that have an account with Bank of America. Because Bank of America is a preferred lender for the Small Business Administration (SBA), it's able to offer three distinct SBA programs that are ideal for both new and long-established businesses.

The SBA 7(a) Loan

The most common and most flexible of the three is the SBA 7(a) loan, available for small businesses that have a demonstrated financial need and have tried alternative financial resources in the past. Banks, leasing companies, businesses that derive a third or more of their annual revenue from gambling, and businesses that engage in illegal activities are just some examples of ineligible businesses. Certain types of businesses, such as franchises, medical facilities, and recreational facilities, must comply with further considerations in order to be eligible.

The purpose of the loan is limited to a few areas: the money can be used for building, expansion, acquiring equipment or inventory, and short- and long-term working capital. Bank of America considers each client's projected use of funds to see whether it's considered a sound purpose by the SBA. For example, the money can't be used to inject equity or to affect a change of business ownership.

The SBA 504 Loan

The SBA 504 loan is available for U.S. businesses that, in the past two years, have had a tangible net worth below $15 million and a tangible net income less than $5 million after taxes. Businesses must not be involved in speculation, gambling, investment, lending, and other practices similarly laid down by the 7(a) loan guidelines.

Companies must also specify beforehand how they will use the proceeds. Acceptable uses include the purchase of land, the acquiring of major building improvements, and the construction of a new building: in other words, the purchasing of fixed assets. Businesses that have been in business for two or more years and need to refinance debt are eligible for the 504 Debt Refinancing Program. The minimum amount for a 504 loan is $350,000; there is no maximum.

The 504 loan terms are similar to those of the 7(a); both have a maximum of 10 years on equipment purchases, but the 7(a) terms for real estate acquisition can last up to 25 years, which is five years more than the max for 504 loans.

The SBA Express

SBA Express loans have an application turnaround time of 36 hours, making them true to their name. Small businesses that wish to have working capital or plan on purchasing fixed assets like equipment, inventory, and vehicles can receive a line of credit between $10,000 and $350,000. Guidelines are largely the same as with the 7(a) loan. A subdivision, the Patriot Express loan, is available for small business owners who are military members or veterans.

Some Notes on the Loan Process

Clients considering an SBA program do not work solely with the SBA but jointly with the SBA and Bank of America. The paperwork required by the SBA is different from that required by Bank of America, but both requirements must be met. All negotiations concerning terms and conditions are conducted between the borrower and Bank of America. As a preferred lender, Bank of America is more likely to make the application and closing process smoother for these SBA loans than other lenders would. Read more about how to apply for a business loan.

Options from Bank of America

Companies that need to buy equipment, such as heavy-duty construction tools, or commercial vehicles over 2.5 tons can have 80% of the purchase price covered through a Bank of America equipment loan. Businesses can also receive a revolving line of credit starting from $10,000 for larger needs; interest is based on the prime rate but is variable according to the client's standing with Bank of America.

The main loan option is the secured business loan for amounts of $25,000 and up; after agreeing to a blanket lien and securing a certificate of deposit, a client can receive the proceeds in one lump sum. Terms can last up to five years. Start-up businesses are not eligible for any of these three options, only those that have been in business for two or more years. So you may have to seek funding for small business startup ideas elsewhere.

Anne Miller

Anne is a Senior Author for SBL. She began her career as an independent consultant for local businesses after graduating with a BA in Management. Since that time, she’s expanded to writing as well as consulting to spread helpful knowledge to small business owners across the country.


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