Small-Business Loans are best arranged by banks If your company has been in existence for more than one year and isn’t in dire need of cash quickly. Even with excellent credit, approvals can take months and they are not always a guarantee.
According to the most recent data from the Biz2Credit SME Lending Index, only 15% of business loan applications are approved by banks. This means that the bank you choose offers more than just the best. Type of business loan You need to have enough funds for financing.
These are the top banks for small-business loans. They are ranked based on their industrial and commercial lending volumes, product offerings, and other options.
1. Bank of America
According to S&P Global Market Intelligence, Bank of America held the record for the highest number of commercial and industrial loans among all banks. This was more than the nearest lender by $122 billion.
If you are looking for rewards, Bank of America’s business loans can be a great choice. You can receive interest rate discounts and no fees for wire transfers if you meet certain account requirements. Bank of America might be a good choice for veterans and military personnel since it offers a 25% discount on origination or loan administration fees.
Term Loan. Bank of America offers both fixed-rate secured and unsecured term loans. The secured loan requires more annual income: $250,000 for the secured option, and $100,000 for the unsecured. It offers higher borrowing limits, up to $250,000, and possibly a lower interest rate. These business loans are available for up to five years and require a minimum of two years of business.
Business lines of credit. Bank of America offers both secured and unsecured business lines of credit. They have the same income requirements as term loans. Secured credit has a higher borrowing limit than unsecured, starting at $25,000 and ending at $10,000. There is no maximum borrowing limit. Both terms have revolving terms that allow you to use the money when it is needed and renew it each year.
SBA loans. Although Bank of America is a preferred lender for Small Business Administration, it is less active in issuing loans. SBA loans. U.S. Bank and Wells Fargo, for example, lend more than 7(a)loans This is the most popular type of SBA financing.
Additional business loans. Bank of America offers auto loans starting from $10,000 You can also get equipment and commercial real estate loans from the bank starting at $25,000.
2. JPMorgan Chase
Chase offers many products for small-business owners including checking accounts, credit cards, and payment solutions. best banks for business loans include:
Term loans. Chase offers adjustable- and fixed-rate loans starting from $5,000. This is lower than banks like Bank of America and PNC Bank. The repayment terms are flexible and can be extended for up to seven years.
Business lines of credit. Chase offers both business and commercial credit lines. The company’s credit line for business provides funding of $10,000 to $500,000 on a five-year renewable revolving term. The commercial line can be extended for up to $500,000 and may be renewed on a one- or two-year basis.
SBA loans. Chase is an SBA-preferred Lender and can fund multiple types of SBA loans. This includes SBA Express loans as well as credit lines that offer quicker funding up to $500,000.
Other business loans. Chase offers commercial real property loans starting at $50,000 with either fixed or variable rates. You can get terms up to 25 years. Chase offers two options: you can choose to repay the loan using a standard repayment plan or a balloon payment at end of the term.
Citibank is perhaps better known for its small business credit cards. The bank offers business loans, though it offers fewer products than some other lenders. Citi may be simpler than you would like, but that doesn’t mean you should ignore other lenders.
Term loans. Citibank offers term loans ranging from $5,000 to $5 Million. The terms are up to seven years, the interest rates are fixed and personal guarantees are required for loans. Citi does not offer equipment loans, but you can get term loans for this purpose.
Business lines of credit. Citibank offers two lines of credit for business, with amounts from $10,000 to $5,000,000. Each line comes with variable interest rates and revolving terms and requires a personal guarantee.
4. Wells Fargo
Wells Fargo offers SBA loans as well as multiple credit lines. However, the maximum lending limits are lower than other banks. If you have collateral or need financing for more than $500,000, consider other options.
Business lines of credit. Wells Fargo offers three types of credit, one secured by collateral and two unsecured. They range from $5,000 to $500,000. Credit lines up to $100,000 can be revolved and have variable rates. Higher than $100,000 credit lines have a 1-year term. To qualify for Wells Fargo’s most generous line of credit, you will typically need to have at least $2,000,000 to $5,000,000 in annual sales. The fees vary depending on the product.
SBA loans. Wells Fargo is one the largest SBA loan lenders. It had approved over $377 million in SBA 7 (a) loans during the 2022 fiscal year, the highest number of large national banks.
Other business loans. Wells Fargo offers semi-truck financing, equity financing, and commercial real estate purchase loans. They also offer specific products to help you start or buy a medical practice.
PNC’s Business Loans are for mature businesses. To qualify, you must have been in business for three years or more. This is longer than what other banks might require.
Term loans. PNC offers term loans from $20,000 to $100,000 for unsecured terms and loans secured with collateral up to $100,001 to 3 million. Unsecured loans have a fixed interest rate and term of up to five years, while secured loans can have fixed or variable rates and terms that can last up to seven years.
Lines of credit for businesses. PNC’s credit lines are similar to banks’ term loans. There are unsecured options that range from $20,000 to $100,000 and secured options that range from $100,001 up to $3 million. Both offer variable interest rates and revolving terms. An annual fee for the unsecured line is $175. The secured line charges 0.2%5% of the committed line amount.
SBA loans. PNC is a preferred SBA lender. However, the bank is less active in issuing these loans than other banks. PNC approved less than 400 SBA 7 (a) loans as of September 2022 compared to Wells Fargo or U.S Bank which approved more than 1,800 each.
Other business loans. PNC business loans are available from $10,000 to $250,000 and have a maximum of six-year repayment terms. Fixed or variable interest rates are available for commercial real property loans. Financing amounts range from $100,001 up to $3 million.
6. U.S. Bank
U.S. Bank is located in a smaller number of locations than other brick-and-mortar banks like Wells Fargo and Bank of America. U.S. Bank might be a good option for startups if you have a branch nearby. You may be eligible for certain products if you are less than one year old.
Term loans. U.S. Bank offers term loans with fixed rates and secured terms up to $1,000,000 The bank also offers a quick business term loan with a lower borrowing limit ($250,000) and a faster application process. You can choose to have the Quick loan secured or unsecured and you can repay it over a period of up to seven years. This product is a great option for smaller businesses as it requires a minimum of six months’ business experience to qualify.
Business lines of credit. U.S. Bank offers a business line of credit that can be extended up to $1,000,000 and includes an interest-only option. CashFlow Manager is a revolving credit line that can be used by companies that have been in business for at least 2 years. It has a maximum limit of $250,000. If the credit line is less than $50,000, there will be a $150 fee.
SBA loans. U.S. Bank might be a good option if you are looking for an SBA loan. It had approved close to 1,800 7(a), loan applications during the fiscal year 2022. You may also be eligible for an SBA loan through U.S. Bank if you are a new business with less than one year.
Other business loans. U.S. Bank can offer equipment loans up to $1,000,000, with soft costs up to 25%. Fixed- and variable-rate commercial real estate loans up to $10,000,000 are available from the bank. They have five-, ten-, or fifteen-year repayment terms. There are amortizations of up to 25 years.
How to get a small-business loan from a bank
According to Biz2Credit, December 2021 saw a drop in business loan approvals by banks due to market conditions and the pandemic. This was nearly half the number of approved loans in 2019. You will likely need the following to be able to get a business loan from banks :
- An existing relationship. A minimum of a business checking account is required by most banks. You can open an account at any bank to satisfy this requirement, but you will often get more value from a long-term relationship. To apply online for financing, you will need to have an account at Wells Fargo for at most one year.
- Good credit. A personal credit score of at least 700 is required. Negative marks, such as late payments, defaults on loans, bankruptcies, and too much debt could be deal-breakers. For similar red flags, the bank will inspect your credit score.
- Strong revenue. When you apply for a small business loan, the bank will examine your business to determine if it is in good standing and has sufficient revenue to cover the amount you are borrowing. Bank of America requires that your business has at least $100,000 in annual income to qualify for unsecured loans. The secured options can increase that amount to $250,000.
- Enough time in business. The standard is two years in the same ownership. There are exceptions, however. Some U.S. Bank products may be available to you if your business has been in operation for at least six months. However, PNC Bank requires that you have three years of experience to qualify.
- Collateral. To get a small business loan from a bank, you don’t have to provide collateral such as commercial property or equipment. Some banks offer secured and unsecured business loans. The bank might offer secured loans with larger amounts, but may also provide longer terms and lower interest rates to make the payments more affordable.