Which Small Business Lender Is Right For You? – Forbes Advisor

If you’re looking to borrow a small business loan from a bank, Bank of America and U.S. Bank are two good choices that offer a wide range of products. Both banks offer term loans, SBA loans and business lines of credit that you could use to purchase inventory, finance real estate or cover other expenses to grow your business.

Depending on you and your business’s needs, one of these lenders may be a good option to fund your venture.

Bank of America vs. U.S. Bank

Both Bank of America and U.S. Bank offer a range of loan options for business owners, including unsecured and secured loans and lines of credit.

Bank of America offers some advantages over U.S. Bank, including lower starting rates, transparency about its borrowing requirements and offering loans in all 50 states. U.S. Bank, on the other hand, does business in 27 states, but may be a good fit for business owners who are looking for a small-amount loan quickly, as it offers “Quick Loans” starting at just $5,000.

Bank of America Small Business Loans

Bank of America offers a variety of small business loans, including secured and unsecured term loan, equipment and real estate loans, and secured and unsecured lines of credit. The bank also offers healthcare practice loans, including loans designed for dental, veterinary, physician and optometry practices.

To borrow a Bank of America term loan, you must be in business at least two years and make a minimum annual revenue of $100,000. Term loan amounts start at $10,000 and have repayment terms of one to five years. Along with interest, you’ll also pay an origination fee of $150.

Loan amounts and terms vary depending on the type of loan you choose. Bank of America’s commercial real estate loans, for example, have terms going up to 15 years, while secured business loans have terms up to four or five years, depending on your collateral.

Pros

• Low starting interest rates. Bank of America’s term loans have rates starting at 7.50%. If you have an established business that can qualify for these low rates, that can reduce your cost of borrowing.
• Available in all 50 states. Business owners across the country can access a Bank of America loan.
• Variety of loan products. As one of the largest banks in the U.S., Bank of America offers several types of loans for business, including both secured and unsecured term loans, lines of credit and specialized loans for healthcare providers.

Cons

• Origination fee. Bank of America’s term loans come with an origination fee of $150.
• Long possible application process. Bank of America doesn’t offer any loans that have quick application turnarounds, which can mean it may take longer to have your loan funded than other lenders.
• Eligibility requirements may be difficult to meet. You can only borrow a business loan from Bank of America if you’ve been in business for at least two years and make a minimum of $100,000 in revenue.

U.S. Bank Small Business Loans

Like Bank of America, U.S. Bank offers a variety of lending products for business owners, including conventional term loans, equipment loans, and unsecured and secured lines of credit. It also offers loan options to healthcare providers, such as veterinarians, eye doctors and dental professionals.

One of U.S. Bank’s unique product offerings is the Quick Loan, which provides loans from $5,000 to $250,000 with repayment terms up to seven years. You can apply online for this loan with a simplified application and a relatively quick funding time, according to U.S. Bank. Rates on the Quick Loan start at 8.49%, but this starting rate is only available to creditworthy applicants who choose loan terms from 37 to 48 months.

If you prefer conventional financing, you can borrow up to $1 million and secure the loan with your business assets. While you can apply for a Quick Loan online, U.S. Bank requires that you speak with a banker to discuss borrowing a conventional term loan.

Pros

• Fast funding and small loan amounts. You can apply for a Quick Loan online and request loan amounts starting at just $5,000.
• No origination fee. You won’t have to pay an origination fee for U.S. Bank to process your Quick Loan application or fund your loan.
• Multiple loan and line of credit options. Along with its Quick Loan, U.S. Bank also provides conventional term loans, equipment loans, commercial loans and secured and unsecured lines of credit.

Cons

• Not available in all states. Your business needs to be based in one of the 27 states that U.S. Bank operates in to borrow a business loan.
• Doesn’t disclose borrowing requirements. U.S. Bank doesn’t disclose the minimum time in business and revenue requirements on its website.
• High starting interest rates. U.S. Bank’s business loan interest rates start higher than other lenders, such as Bank of America.

Choosing Between Bank of America and U.S. Bank

Both Bank of America and U.S. Bank are worth considering if you want to borrow a business loan from a traditional bank with brick-and-mortar locations. Whether you live near a branch or prefer to speak over the phone, both banks offer the opportunity to speak directly with a banker throughout the borrowing process.

However, neither bank has good reviews on the consumer review site TrustPilot. Both receive an average rating of just 1.3 stars out of five based on customer reviews. These reviews aren’t limited to either bank’s business loan products, though, but rather may be based on bank accounts, credit cards or other financial services.

If you’re already banking with Bank of America or U.S. Bank, it may be best to work with your current bank. U.S. Bank offers a 0.50% interest rate discount if you set up automatic payments from a U.S. Bank account. Bank of America also offers rate discounts, fee waivers and other benefits to eligible Bank of America Preferred Rewards for Business members.

Both banks offer multiple business loans and lines of credit that can fit a variety of needs, whether you’re looking for a term loan, SBA loan, equipment financing or a revolving line of credit. Consider the pros and cons of each institution to determine which would be the better fit for you and your business.