Having sufficient funds to run a business is very important. This is especially true during the crucial stages like when your business is just starting out, or when you are thinking of expanding to a new location, or when you want to grab a valuable investment opportunity.
How the Best Banks for Small Business Loans Can Help Your Business Grow
You’re quite fortunate if you have enough resources available to cover these expenses. But if you are short on cash, we have several funding options here at Booster Financial that you can consider.
Our number one priority here at Booster financial is to provide you with the assistance and support that you need in order to keep funding your business even through the most challenging times. That is why we work closely with the most trusted lenders in order to give you access to the most lucrative lending options available. By that, we are referring to the best banks for small business loans that you can approach for your funding needs.
Benefits of Taking out a Small Business Loan from a Bank
When you mention to friends or business associates that you are planning on taking out a bank loan to help with your business finances, you will probably get mixed reactions. Many are quite hesitant to approach a bank for a business loan because these institutions are very strict with their requirements and thus, many hopeful borrowers end up getting rejected. For instance, banks require a higher credit score than nontraditional lenders.
Also, even the best banks for small business loans will take quite a long time to process loan applications because they carefully check the borrower’s credit history and the situation of the business. Despite these, however, banks remain to be one of the most preferred lenders by small business owners because their pros far outweigh the cons.
One of the reasons why small business owners choose to slug it out with the extensive requirements and long waiting period for approval is because the rates that banks usually offer are quite competitive. They charge borrowers a much lower interest rate compared to most of the other lenders that you can approach for a small business loan. These affordable rates can become even lower if you have a really good credit score and if your business shows excellent returns.
Lending officers from banks are highly trained not only in the technicalities of loans but also in the different financing options that you might be able to use for your business. While you have an open loan with the bank, you can avail of the continuous support from the bank manager with regards to the financial aspect of your business.
Another popular reason why so many small business owners turn to banks for their financial needs is because banks are trusted institutions, much more so than many other lenders. Especially with banks that have been operating for decades, you can trust that they will never run away with your money and that they will strictly adhere to their side of the loan agreement at all times.
Wide Range of Financial Products
No matter what kind of loan or line of credit you are looking for, there’s a very good chance that the best banks for small business loans will be able to provide it for you at a competitive cost. Some of the most popular financial products that banks can provide to business owners in addition to traditional small business loans are business credit cards, short-term lines of credit, commercial mortgage, equipment financing, and so on.
Assistance with SBA Loans
A Small Business Administration or SBA loan is a very helpful loan for business owners because it will not only provide you with the funds that you need but also comes with guaranteed support from the SBA, which is very valuable if you want to successfully grow your business. SBA loans typically come with lower interest and more lenient repayment terms. Banks can help you apply for these preferred loans and can also provide you with assistance when it comes to the requirement and paperwork.
Best Banks for Small Business Loans
Banks vary in terms of lending products, interest rates, repayment terms, and so on. Naturally, each of these banks will try to outdo the others in order to attract more borrowers. It’s hard to identify the best bank for small business loans per se since each business has unique funding needs. A lending program that might be perfect for one business might not be a very good choice for another. Nevertheless, we have compared the different product offerings of the many lending banks in the country and we have found the following to have the most outstanding options for small business owners.
Bank of America
When it comes to small business loans, Bank of America leads all other banks by a considerable margin. As of the most recent reports by S&P Global Market Intelligence, the total of commercial and industrial loans offered by Bank of America exceeds those of the second lender on the list by close to $100 billion.
If you apply for any of their business loans and you meet certain requirements, you can qualify for even lower interest rates and they might also waive your wire transfer fees. Furthermore, they also offer a 25% discount on fees for loan origination or administration for veterans and service members.
If your business generates revenue of at least $250,000 annually, you can apply for Bank of America’s secured term loan. This loan comes with a borrowing limit of as high as $250,000 and has a considerably lower interest rate than the unsecured term loan, which is applicable for businesses that earn at least $100,000 annually. For either of these loans, Bank of America requires at least 2 years of business operation.
In addition to these traditional business loans, Bank of America also offers lines of credit and other types of business loans that you can use specifically for the purchase or maintenance of a company vehicle, real estate and equipment. They also have SBA loans, although this is not really their focus.
Next on our list of best banks for small business loans is JPMorgan Chase. Although not as sizable as Bank of America, Chase does have the crucial advantage of offering smaller loans that start at only $5,000, which makes them preferable for smaller businesses. They also offer longer repayment periods of up to 7 years, depending on the type of loan and the amount that you will borrow. You can avail either fixed rate or adjustable rate loans for your business from Chase.
Chase might also be a better lender of SBA loans because they offer much more varieties, including SBA Express credit lines and loans that are easier and faster to avail. If you are in search of funds for the purchase of new equipment, Chase has numerous equipment loans you can consider, starting from $10,000.
Despite recently terminating their traditional loan products, Wells Fargo does still have a number of funding assistance options for small businesses, such as their different types of credit lines. They actually have three lines of credit that you can apply for if you are a business owner. Two of these are secured by collateral while the third one is unsecured.
Now, when it comes to SBA loans, many would agree that Wells Fargo is one of the best options. Just in one fiscal year, they have approved over $115 million in SBA 7(a) loans, which is greater than the amount approved by any other national bank.
Wells Fargo also offers several loans specific to various business purposes, like commercial real estate purchase loans, equity financing, and semi-truck financing. They even have special loans for those who are thinking of purchasing or establishing a medical practice.
All over the world, Citibank is quite well known for its small business credit cards that can really be of great help to anyone starting or operating a small business. They offer two different lines of credit to business owners that can range from $10,000 to a whopping $3 million. These lines of credits are revolving and their interest rates are variable.
Their term loans might not be as popular but Citibank does offer these in the same range as the lines of credit. The terms can last for up to 7 years and may be used for a variety of purposes.
Compared to many of the other traditional banks, US Bank has fewer actual locations so it might not be as physically accessible as other lenders. But if you are in close proximity to one of their relatively scarce branches and your business is fairly new, you would have a good chance of qualifying for an SBA loan compared to other banks, many of which require at least 2 years of business operation.
If you are interested in a business line of credit, US bank’s line has a limit of $1 million and comes with a payment option of interest only. They also have the CashFlow Manager, which is a revolving line of credit of up to $250,000. Only companies that have at least 2 years of business operation can qualify for this revolving credit line.
US Bank is also a great option if you are looking for the best banks for small business loans. According to the 2020 report, this bank ranks second among all banks in terms of approved SBA loan applications.
PNC Bank has more than 2600 branches all across the country and the loans that they offer are more suitable for established businesses. One of their requirements for loan approval is that your business should have been operating for at least 3 years, which is longer than the usual 2 years required by many other banks.
Both their term loans and business lines of credit have a range of $20,000 to $100,000 for the unsecured options and $100,001 to up to $3 million for the secured option. The interest rate is fixed on the unsecured term loans and can either be fixed or variable for the secured term loans. As for the lines of credit, all lines come with variable interest and terms that are revolving.
In addition to the standard business loans, PNC offers business-specific loans like auto loans of $10,000 to $250,000 and commercial real estate loans of up to $3 million.
FAQs about Small Business Loans
Small business loans are a very helpful tool for new and established business owners to help cover various expenses for the business. They come in many different forms and can be availed from different lenders.
What are the possible uses of small business loans?
Most borrowers of small business loans use these funds for starting a new business. However, these can also be used for business expansion, purchasing new equipment, funding inventory, increasing the working capital, purchasing commercial real estate, and many more.
Where can I get a small business loan?
Most business owners approach traditional financial institutions like banks because they are highly trusted lenders. The best banks for small business loans also offer very low lending costs and generous repayment schedules. They do have rather strict requirements though, and if you don’t qualify for a bank loan, you can look at alternative lenders, credit card companies, peer to peer lending platforms, or maybe even friends and family members.
What are the types of small business loans?
The most popular are the SBA loans or those that are supported by the Small Business Administration. You can also choose from term loans, lines of credit, invoice financing, or short-term loans. The best loan would depend on your need and your repayment capacity.
Should you have further questions or need any kind of assistance when it comes to securing a small business loan, you can simply get in touch with us. Here at Booster Financial, we can give you all the advice and support you need when it comes to financing your business and taking it to a whole new level of growth and success.
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