Bank of America Small-Business Loans Review 2022: Low Rates, If You Can Qualify

If you like big banks and you cannot lie, then we need to talk about Bank of America (BoA) and its small-business financing. 

With plenty of loan options, ultra-low interest rates, and long repayment terms, this traditional bank could offer just what you need to expand your business. On the other hand, its strict borrower requirements, slow funding times, and poor customer reviews could make Bank of America a no-go.

Here’s what you should know before applying.

• Loan products and pricing
• Features
• BoA vs. competitors
• Drawbacks
• Other products
• Takeaway
• FAQ

Like we said, Bank of America has lots of loan choices. But when each has unique terms, rates, and uses, how do you know which one you should get?

The answer, of course, depends on your business’s needs. If you’re buying a car for your business, for example, you’ll want the Business Advantage Auto Loan; if you just want some working capital, you might want the Business Advantage Credit Line.

But not all choices are quite that obvious, so let’s take a more detailed look at each of Bank of America’s small-business loans.

Note that Business Advantage financing―including the term loan, line of credit, and auto loan―have lower borrower requirements than other financing options. With Business Advantage products, you need just $100,000 in annual revenue to qualify, while other products require at least $250,000 in revenue. With either product, your business must be at least two years old, and you need strong personal credit.

The Business Advantage Credit Line gives you revolving credit (you can draw and repay repeatedly) to improve your cash flow. As an unsecured option, this line of credit won’t require you to provide any collateral.

While many small-business owners will prefer a collateral-free option, this line of credit does come with lower credit limits and higher rates than its secured counterpart. Still, this line provides affordable revolving credit with a monthly payment schedule.

This line of credit also helps with cash flow, but it does require collateral. More specifically, this loan gets secured via a blanket lien on your business assets.

While that means you take on a little more risk as a borrower, you get rewarded with lower rates and higher credit limits. In fact, Bank of America doesn’t set a maximum credit limit for this line; your personal maximum depends on the worth of your assets.

This basic term loan provides another unsecured financing option for your cash flow or expansion needs. Again, that means a smaller maximum loan size—$100,000 vs. the virtually unlimited max for a secured loan—and higher rates.

But you still get a comfortable term of one to five years, and you need only $100,000 in revenue to qualify for this loan (rather than $250,000 for a secured version).

Bank of America’s secured business loan also helps with cash flow or business growth, but it requires either a blanket lien on your business assets as collateral or a certificate of deposit (CD).

The blanket lien can get you a term of up to four years; a CD gets you up to five years. As you’d expect, this secured loan has higher maximums than BoA’s unsecured loan, but it also requires higher revenue and comes with a 0.5% loan origination fee.

BoA’s Business Advantage Auto Loan is a vehicle loan—not a general equipment loan. You can use it only to buy cars, vans, and light trucks for your business, and the vehicle you buy has to meet some specifications: five years old or less, worth at least $10,000, and less than 75,000 miles on it. So as long as you don’t want to get a ’97 Pontiac Grand Am, you can get a term of four to six years with nice low rates.

This equipment financing, on the other hand, can help you buy larger commercial vehicles (think trucks or trailers) or other business equipment (think stuff like packing machines, office equipment, or construction equipment).

This versatility comes with a price—slightly higher rates and fees than BoA’s auto loan, in this case—but it provides a way to finance whatever kind of equipment you need.

Bank of America’s commercial real estate loans provide funding to buy real estate; that real estate then serves as collateral for the loan.

The term of these loans depends on your repayment schedule: if you choose balloon payments, you get a term up to 10 years; with fully amortizing loans, you’ll get up to 15 years.

Bank of America offers practice solution loans for dentists, veterinarians, and doctors. These loans give you up to $5 million to open or expand your medical practice.

While Bank of America promises “very competitive” rates and terms on these loans, you’ll have to speak with a banker about your practice needs to get more specific details.

So what makes Bank of America stand out? Three things:

• Loan options
• Long repayment times
• Low rates

Unlike many online lenders that offer just one type of loan, Bank of America offers many financing products to meet your working capital needs. It offers term loans and lines of credit both secured and unsecured, as well as specialized loans for vehicles, equipment, real estate, and medical practices. That means you can decide which loan works best for your needs, rather than just choosing a loan because it’s the only option.

But Bank of America also offers the long terms you’d expect from a big bank. Its unsecured loans, for example, have terms ranging from one to five years—far longer than the one or two-year terms of many online lenders.

And of course, Bank of America has low rates that can compete with the best lenders. It consistently has some of the lowest interest rates of any lender we review. So you’ll pay less for the privilege of borrowing money, making Bank of America far more affordable than many business lenders (especially online lenders).

You get the general idea. But let’s look more closely at how Bank of America compares to its competitors.

Bank of America competes primarily with other big banks, like Wells Fargo and Chase. But with the rise of online lenders, it has to compete with alternative lending companies too. Here’s how they stack up against one another.

Bank of America and Wells Fargo have similar financing products, including loans, lines of credit, and credit cards. (Wells Fargo has recently discontinued its regular term loans, though it still offers SBA term loans and commercial real estate loans.)

Wells Fargo has stricter application requirements than Bank of America. It requires a full three years in business to apply and asks for $1.50 in revenue for every $1.00 borrowed. Likewise, Wells Fargo suggests applicants have multiple sources of current credit, profitability for at least the past two years, and a clean credit history (no bankruptcies) for the past 10 years.

While Bank of America may look at all those as factors too, its actual requirements boil down to what we said up top: just two years in business, and $100,00 in revenue for unsecured loans or $250,000 for secured loans. So if you have a younger business or less revenue, you should probably go with Bank of America.

In terms of reputation, customers like Bank of America more than Wells Fargo—but just barely. In a ranking of the 40 top banks in the United States, Bank of America comes in at 36, while Wells Fargo comes in at 40.¹

We’ve already mentioned some of the downsides to Bank of America lending, but let’s make them crystal clear.

As a traditional lender, Bank of America has stricter applicant qualifications than most online lenders; it asks for higher credit scores, longer business history, and more revenue.

For its unsecured loans, it requires your business to be at least two years old and to have annual revenue of at least $100,000. For its other loans, Bank of America asks for an even higher $250,000 in revenue—but it offers great loan options in return. (Bank of America no longer lists a minimum credit score for borrowers, but expect to need something in the high 600s.)

While those lending requirements aren’t as strict as some other big banks, Bank of America’s criteria excludes young startups or other businesses with poor credit.

These days, many online lenders offer next-day funding (or faster). In comparison, Bank of America moves at a glacial pace. You can’t even apply for most of its loans online―instead, you have to talk to a banker in-person or over the phone. By appointment.

So even if you get funded quickly (a couple days) after approval, simply getting your application in and approved will take longer at Bank of America than online lenders. 

In other words, Bank of America isn’t for businesses in a hurry.

Finally, Bank of America doesn’t get great reviews. 

It earns a measly 1.4 out of 5 on Trustpilot.² Sure, other banks do worse―but when you can easily find online lenders with 4.8 ratings, Bank of America seems to be doing something wrong.

Many negative reviews complain about the customer service, while other claim they were required to pay bogus fees (usually with bank accounts) or didn’t get promised perks (again, mostly with banking). 

Of course, many of those customers aren’t using Bank of America for business lending, so you can decide how much weight to give those reviews. We just thought you should know about them.

Still interested? Then we’ve got a few more things to show you.

We probably don’t need to tell you that Bank of America offers many other services for small businesses (but we’ll tell you anyway, just in case). These include banking services, like checking accounts, savings accounts, and credit cards; investing services, like 401(k)s and IRAs; and even other helps like tax services, payroll services, and merchant services. (You can learn more about all of those in our Bank of America business banking review.)

But what you might not know? Bank of America has Business Advantage Relationship Rewards, which rewards you for using Bank of America’s services with things like discounted rates on loans.

To qualify for Relationship Rewards, you need to start by getting a Bank of America business checking account. Then, when you have a three-month average of $20,000 in your BoA business deposit account or business investment account, you can sign up for Relationship Rewards at the Gold level.

At the Gold level, you get things like waived fees on banking, more rewards on credit cards, and 0.25% discounts on interest rates for most small-business loans.

With higher account balances, you can advance to the Platinum and then Platinum Honors levels. That interest discount will increase to 0.5% and then 0.75%.

As you can see, the Relationship Rewards program can get you big discounts on Bank of America’s already low interest rates. So you have some good incentives to use Bank of America for your small-business banking in addition to your financing needs.

Bank of America offers everything you’d expect of a traditional lender: lots of loan choices, low rates, long terms, and plenty of other financial services for small businesses.

Unfortunately, Bank of America has lots of the downsides you’d expect from a traditional lender too, like bad customer reviews, high borrower requirements, and slow funding times.

Still, if you think you can qualify, talking with a Bank of America representative is probably well worth your time.

Not convinced by Bank of America? Check out some of our favorite online lending alternatives on our list of the best small-business loans.

• Bank of America merchant services review
• Chase vs. Bank of America
• Traditional banks vs. alternative lenders
• Best low-interest small-business loans
• Best business lines of credit

We put lots of research in, looking at Bank of America’s loan options, interest rates, loan fees, repayment terms, borrower requirements, and more. We scored each of these factors and then averaged those scores to get our overall score. That overall score guided our Bank of America review and our comparisons to other business lenders.

But wait—there’s more! Let’s address a few of the common questions small-business owners have about Bank of America and its loans.

How you apply for a Bank of America loan depends on your customer status and the loan you want.

Are you already a Bank of America customer? Then you can apply for a Business Advantage Credit Line or Business Advantage Term Loan on Bank of America’s website.

But if you’re not already a customer, or if you’re applying for any other loan or line of credit, you’ll have to either apply in person at a Bank of America location or over the phone. Your banker will help you gather everything you need, but expect to present profit statements, a business plan, and other financial documents.

The fees on Bank of America loans will vary depending on the precise loan. With the secured line of credit, for example, the origination fee amount depends on the credit limit.

As a rule, however, you can expect some kind of origination fee on your loan (often 0.5% to 0.75% of the loan amount). But you won’t pay application fees, and the lines of credit don’t have cash advance fees.

Yes, Bank of America offers two types of SBA loans: SBA 7(a) loans and SBA 504 loans. Both come backed by the U.S. Small Business Administration, but 504 loans work better for real estate needs, while 7(a) loans fund general working capital needs. You can talk to a Bank of America representative to apply.

And just so you know, Bank of America actually extends a lot fewer SBA loans than its competitors. Wells Fargo, for example, has approved 3,898 SBA 7(a) loans, totaling over $1 billion; Bank of America has approved just 247 loans totaling less than $200 million.³

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.