Bank Of America Review

Overview

As of March 31, 2023, Bank of America holds the largest share of commercial and industrial loans among U.S. banks, with over $329 billion in loans, surpassing the next closest lender by more than $127 billion, according to S&P Global Market Intelligence. The bank offers a wide range of small-business loans, including SBA loans, term loans, business lines of credit, auto loans, and equipment financing. While strong credit and, in most cases, several years of business history are required to qualify, existing customers can benefit from discounted interest rates and other exclusive perks.

Types of Loans

Secured Term Loan

Secured term loans ask for collateral but usually come with lower interest rates, starting at 6.00%. The minimum required amount is $25,000, and repayment terms range from up to 48 months for loans secured by business assets, or up to 60 months if secured by certificates of deposit. There’s an origination fee of 0.50%, but veterans can receive a 25% discount on the fee by providing proof of service.

Unsecured Term Loan

Business Advantage Unsecured Term Loan is an excellent option for businesses that don’t have collateral to offer. Loans start at $10,000 and can be used for various purposes, including inventory, expansions, energy-efficient equipment, and other business needs. The loan features fixed interest rates starting at 6.50%, a one-time origination fee of $150, and flexible repayment terms ranging from 12 to 60 months.

Secured Line of Credit

Secured lines of credit offer businesses the potential for lower interest rates, but they require collateral, either in the form of a blanket lien on your business assets or a certificate of deposit (CD). Starting at $25,000 credit lines start at enjoy as low as 9% interest rates. Take note of the following fees Bank of America charges for secured lines of credit:

• Up to $100,000: $150 upfront fee plus an annual review fee
• $100,000.01 to $250,000: $250 upfront fee plus an annual review fee
• $250,000.01 and above: 0.50% of the credit limit as an upfront fee

Unsecured Line of Credit

A business line of credit allows you to borrow up to your credit limit as needed, paying interest only on the amounts you withdraw. It’s ideal for managing ongoing or occasional expenses, such as hiring new staff or covering seasonal revenue fluctuations. The Business Advantage line of credit starts at $10,000, with interest rates starting at 9.50%.

Cash-Secured Line of Credit

A cash-secured line of credit from Bank of America can be a great way for businesses, especially early-stage startups or those with limited or poor credit, to build and improve their business credit profile — potentially helping you qualify for future funding.

To open the account, you’ll need to provide a security deposit of at least $1,000. When you draw from the credit line, you’ll repay it with a variable interest rate. There are no origination fees, but there is a $150 annual fee (waived for the first year) and a 3% fee for international transactions. Late fees vary from $0 to $49 depending on your balance. After 12 months, Bank of America will review your account. If you’ve managed your credit line responsibly and meet other criteria, you may be eligible to upgrade to an unsecured line of credit.

Equipment Financing

Bank of America’s equipment financing loans can help businesses finance vehicles over 2.5 tons and other types of equipment. Loans start at $25,000, with flexible terms ranging from 12 to 60 months. Interest rates begin at 6.25%, and there is a 0.50% origination fee.

Business Auto Loan

With a Bank of America business auto loan, you can borrow $10,000 or more to buy or refinance a vehicle. Loan terms are available from 48 to 72 months, with fixed interest rates starting at 6.29% APR. To qualify for financing, the vehicle must meet certain criteria: it should weigh under 2.5 tons, have fewer than 75,000 miles, be valued at least $10,000, and be no more than five years old.

Commercial Real Estate Loan

Commercial real estate loans begin at $25,000 and can be used for purchasing land or commercial property, or for leveraging equity to grow your business. Interest rates start at 5.50%, with a 0.75% upfront fee, and additional fees or closing costs may apply. Loan terms are available up to 180 months for fixed payments, or up to 120 months if you opt for a balloon payment. While balloon payments can be risky — requiring a large lump sum payment at the end of the loan term — they may be a viable option if you’re prepared to manage the risk and plan ahead.

Borrower Requirements

Bank of America’s business loan requirements differ based on the specific product. The cash-secured line of credit is the easiest to qualify for, as it demands the least amount of business history and revenue. Other loan products typically require a minimum of two years in business and at least $100,000 in annual revenue.

While Bank of America does not disclose the minimum credit score needed for all business loans, unsecured loans or lines of credit generally require a credit score of 700 or higher.

Keep in mind that unless your credit score is excellent, the interest rate offered may be higher than the advertised starting rates. Tools like LendingTree Spring can help you track and improve your credit score.

How to Apply for a Loan?

You can easily apply online for lines of credit, unsecured business term loans, and the Cash Secured Credit Line, as well as a business auto loan if you already have a Bank of America Online Banking account. For all other loan types or if you don’t have an online banking account, you’ll need to schedule an appointment with a business lending specialist, either by phone or in person. When applying for a loan, you’ll be required to provide basic information about your business, as well as details about each business owner, guarantor, and controlling manager.

When applying for an equipment loan, business auto loan, or commercial real estate loan, it’s essential to provide specific details about the property, vehicle, or equipment you intend to finance. While having a Bank of America business checking account isn’t a prerequisite for submitting a loan application, certain loans may require payments to be automatically deducted from such an account. If approved, you might need to open one to meet this requirement.

Customer Support

For new account opening, you can call 866.283.4075, available Monday through Friday from 8 AM to 10 PM ET. For assistance with Online Banking, contact 866.758.5972, available Monday through Friday from 7 AM to 11 PM ET, and Saturday from 8 AM to 8 PM ET.

Bottom line

The ideal business loan typically offers the lowest interest rates and most favorable terms. However, other considerations, such as funding speed and your business’s eligibility criteria, also play a key role in selecting the right loan option. Bank of America business loans are a strong choice for established businesses that already have Bank of America accounts and can benefit from Preferred Rewards member discounts. These loans offer favorable terms for qualifying businesses that meet these criteria.

Bank of America’s cash-secured line of credit is a valuable tool for entrepreneurs looking to build their business credit profile. To qualify for an unsecured loan or line of credit, you’ll need a minimum credit score of 700. Additionally, you can save on loan interest by maintaining a balance of at least $20,000 in a Bank of America business checking account through the Preferred Rewards program.