Bank of America

• Many Loan Options
• Loan Process
• Transparent

Many Loan Options

Bank of America offers a selection of business loan options, including a standard business loan and real estate, vehicle, and equipment loans and lease purchases. They also offer business lines of credit and business credit cards. Bank of America is a preferred SBA lender and offers information and help applying for and securing an SBA loan.

Loan Process

Their loan process focuses on five C's to determine the creditworthiness of a business:

• Capacity: Does the business have the financial capacity to support debt and expenses?
• Capital: Is there enough to support the financing the business wants?
• Collateral: What accounts receivable, inventory, cash, equipment, and real estate does the business have to secure loans?
• Conditions: The state of the economy, trends in the industry, and pending legislation relative to the business may have an effect on a business's ability to make payments.
• Character: Work experience, experience in the industry, and personal credit history are all traits the bank will consider.

Transparent

In general, finding information about business loans from banks is very difficult. Even though banks generally have lower interest rates than alternative lenders, there doesn't seem to be a standard interest rate (possibly too many factors to even give a range online). Also, it is difficult for new businesses to qualify for bank loans because the requirements are so steep. Bank of America was slightly more transparent than other banks, but information was still difficult to find. A few points we were able to find reflected positively on Bank of America:

• Long / flexible term length (2-20 years)
• Loan amounts of $5,000 - $25,000
• Available in all 50 states

• Business Collateral
• Missing Information
• Account Requirements
• Reputation

Business Collateral

Because Bank of America provides traditional bank financing, many small businesses may not have the collateral needed to secure loans. General business assets, a certificate of deposit (CD), or real estate is required as collateral against a standard loan. Bank of America also requires a business to have been operating for at least two years.

Missing Information

There are several key pieces of information we believe business owners should have access to before applying for a loan that Bank of America did not provide:

• Interest rates
• Minimum credit score
• Minimum annual revenue
• Prepayment penalties
• Time to funding

Account Requirements

While a Bank of America account is not required in order to apply for a loan, it is required to accept a loan in order to facilitate deposits and withdrawals, including automatic repayments. There are standard closing cost fees of 0.5 percent for business loans, as well as the potential for additional fees that will depend on the type of loan. However, if an individual or business already has a good relationship with Bank of America, those fees can be waived. A business line of credit has upfront fees of $150, $250, or 0.5 percent, depending on the line of credit amount, and the yearly renewal fees are the same.

Reputation

After 2008, the number of negative reviews and complaints for banking institutions increased dramatically, and Bank of America has received a particularly large number of negative reviews. While many are focused on a customer's experience with a specific branch or location, the majority of complaints center on poor customer service, unnecessary fees that were not reversed or refunded, and a lack of upfront information about fees or policies (or policies that seem to change without warning). In an industry where customer service is paramount to every aspect of business, many of the complaints centered on customer service representatives who were unhelpful or who did not seem to know or understand the bank's policies. There have also been complaints circulated that Bank of America is not small business friendly and is more geared toward larger, more profitable businesses.