Bank of America is an established banking institution that offers a variety of secured financing options for businesses. They offer business loans, business lines of credit, and business credit cards, and they are a preferred SBA lender. Bank of American was incorporated in 1998, though the bank was originally founded in 1949.
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. Benefits of the service include:
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.
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)
- Minimum of 2 years in business before applying
- 1% origination fee
- Loan amounts of $5,000 – $10 million
- Available in all 50 states
As with other bank business loans, Bank of America requires fairly extensive personal and business information to process a loan application. The required information includes:
- The business name, address, phone number, and tax ID
- The nature of the business
- The date the business was established and the date of acquisition for the current owners
- The number of employees
- The annual net profit and gross sales
- A list of outstanding financial obligations
- The applicant’s name, address, phone number, social security number, and birthdate
- The applicant’s personal income
- The applicant’s residential status (rent or own) and monthly housing pay
- Where applicable, information about the equipment, vehicle, or real estate the loan is intended for
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. Limitations include:
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
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% 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%, depending on the line of credit amount, and the yearly renewal fees are the same.
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.
*Star Rating is determined by evaluating APR range, minimum credit score requirement, revenue requirement, length in business requirement, and other related approval data.