Best Banks for Small Business Loans

So you need some startup cash for your small business, but how do you find the best banks for small business loans?

There are a ton of different options, including online lenders, microloans, and banks. Still, getting a small business loan is no walk in the park.

The process can be painstaking, and there’s a decent chance that your business won’t qualify. The good news is that there are steps you can take to give yourself the best possible chance of approval.

Keep reading to learn all about small business loans, including our list of the best lenders to help your business grow.

7 Best Banks for Small Business Loans

Here are the best banks for small business loans today.

  1. Bank of America
  2. Chase Bank
  3. U.S. Bank
  4. Wells Fargo
  5. TD Bank
  6. Capital One
  7. Live Oak Bank

1. Bank of America Bank of America Logo

Bank of America (BoA) is one of the largest financial institutions in the world and among the biggest commercial lenders in the US. The bank offers a variety of loan options and perks for small business owners.

BoA Business Loans

BoA offers both secured and unsecured business loans. To qualify for either loan program, you need to be in business for at least two years and have at least $100,000 in annual revenue. Unfortunately, if you are a new business, you won’t qualify.

Loan amounts start at $10,000 with interest rates as low as 5.25%. Additionally, BoA also offers options for commercial real estate loans and equipment loans.

SBA Loans

BoA is an SBA-preferred lender, and it offers SBA loans ranging from a huge variety of term lengths and amounts. Though BoA isn’t as well-known for its SBA loans as some other banks, it still exists as a great option if you’re looking to go this route.

Credit Lines

BoA’s credit lines work in a similar way to its conventional loans. You can apply for a minimum credit line of $10,000, and interest rates start at 4.75%. Customers that enroll in BoA’s preferred business reward program are eligible for a discount.

The bank offers options for both secured and unsecured credit lines. To get one, you need to meet the same requirements of two years in business and $100,000 in revenue.

2. Chase Bank Chase Bank Logo

Chase is a “Big Four” American bank that provides online banking, merchant services, and loans to small businesses.

Chase Small Business Loans

Chase’s term loans start at $5,000 and repayment terms range from 12 to 84 months. You can count on set monthly payments and competitive rates that are both fixed and adjustable.

SBA Loans

Chase offers three different SBA loan programs: SBA 7(a), SBA 504, and SBA Express.

Of the three, SBA 7(a) is the most flexible and can be used for a variety of business expenses. Chase offers SBA loans up to $5 million, with less money down and a longer repayment schedule than its traditional loans.

Credit Lines

Chase recommends its business credit lines if you need easy access to short-term working capital or a simple emergency fund. The bank offers lines ranging from $10,000 to half a million, and you can work around the annual fee if you utilize at least 40% of your limit.

3. U.S. Bank US Bank Logo

If you live west of the Mississippi, U.S. Bank is worth consideration. While it isn’t as big as its above-mentioned competitors, U.S. Bank is one of the most popular banks in the West and Midwest.

US Bank Conventional Business Loans

U.S. Bank offers secured loans up to $1 million with fixed interest rates. Businesses that don’t need a large amount of capital and want faster processing can opt for a Quick Loan with a $0 origination fee. Quick Loans are available for up to $250,000 and established businesses should expect a simpler approval process.

U.S. Bank also offers equipment financing up to $500,000.

SBA Loans

U.S. Bank offers both SBA 7(a) and SBA 504 real estate loans up to $12 million.

Credit Lines

U.S. Bank provides credit lines up to $1 million. Alternatively, you can opt for a Cash Flow Manager line, which is available for up to $250,000 and comes with a quick and easy online application.

4. Wells Fargo Wells Fargo Logo

Wells Fargo has more brick-and-mortar branches than any other bank in the US. While it doesn’t have the same nationwide coverage as Chase, it’s one of the most accessible banks out there.

For businesses, Wells Fargo offers tailored accounts to businesses at different stages. Its small business loans work in the same way, so companies of all shapes and sizes should be able to find the terms they need.

Wells Fargo Conventional Loans

Wells Fargo seems entirely focused on credit lines and SBA loans. In 2021, the bank decided to discontinue the conventional term loans it previously offered. We’ll keep an eye on things to see if this changes, but for now, conventional business loans aren’t an option with Wells Fargo.

SBA Loans

Wells Fargo offers SBA 7(a) and SBA 504 options for amounts up to $11.5 million. Term lengths are up to 25 years for real estate and 10 years for anything else.

Credit Lines

New Wells Fargo customers won’t pay an annual fee on credit lines in the first year. Rates are as low as 1.75%, and you can open a line ranging from $5,000 to $100,000. You’re also automatically enrolled in Wells Fargo’s rewards program when you open a credit line, which comes with some extra perks.

5. TD Bank TD Bank Logo

TD Bank is one of the best financial institutions on the East Coast with over 1,100 locations and well-regarded customer service.

TD Bank Conventional Business Loans

TD Bank’s conventional business loans come with flexible terms from one to five years. You can apply online for loans up to $100,000 with fixed monthly payments. Plus, when you apply for a conventional loan, TD Bank will automatically review your SBA loan eligibility.

SBA Loans

TD offers 7(a), 504, and Express loans. SBA loans are available for up to $5 million, with repayment terms as long as 25 years. Plus, TD is a preferred SBA lender, and its team of SBA loan specialists will happily walk you through the process.

Credit Lines

With a TD credit line, you can access funding via check or online transfer. Each credit line comes with a competitive, variable interest rate, and you can count on quick access to cash for inventory or payroll.

6. Capital One Capital One Logo

Capital One is a hybrid bank with physical locations in the East and an outstanding online platform. The bank offers conventional loans, SBA loans, and credit lines for small businesses.

Capital One Business Loans

To qualify for a Capital One business loan, you need an existing relationship with the bank. Your business must also be over two years old.

Capital One offers a variety of conventional loans, from real estate loans to consolidations. Businesses can borrow up to $5 million and terms can extend up to 20 years.

SBA Loans

For longer terms and better rates, Capital One has both SBA 7(a) and 504 loans available.

Credit Lines

Capital One credit lines start at $10,000 and range up to $5 million. The requirements are the same as those for a conventional loan, and you can apply online or at a branch location.

7. Live Oak Bank Live Oak Bank Logo

Live Oak may be less of a household name, but it’s become a big player in the small business lending field. The bank’s main focus is funding small businesses in the US.

One of the best things about Live Oak is its dedication to helping businesses at every stage of their development. Whether you’re just starting out or trying to expand, Live Oak can help you come up with a plan.

SBA Loans

SBA loans are Live Oak’s bread and butter. In 2021, the bank was the top SBA lender in the US by the total dollar amount. It offers 7(a) loans up to $5 million and 504 loans up to $15 million, with loan terms of up to 25 years and minimal equity required.

Types of Small Business Loans

Let’s take a closer look at the most common types of small business loans.

1. Conventional Loans

Most small business owners will opt for a conventional loan, which is also known as a business term loan. These traditional loans are fairly straightforward and work similarly to personal loans.

The approval rate for a conventional business loan is anywhere between 10% and 30%, though this number has increased in recent years. To qualify for any type of small business loan, it’s important to make sure that your credit score is in good shape when you apply. You’re unlikely to get approval if your score isn’t good (ideally, above 700).

The terms of a conventional loan can vary widely depending on how much you need and how quickly you want to pay it back. Interest rates also vary widely based on your credit and the stability of your business.

2. Credit Lines

If you don’t necessarily need a lump sum of cash, you might want to consider a business line of credit. Much like a business credit card, a credit line is there to use whenever you need it, making it a more flexible loan option.

The main benefit of this financing option is that you only pay interest on the amount that you actually use (versus when you take out a traditional loan, you’ll pay interest on the full amount).

However, you do have to watch out for the interest rate, which could be sky-high if your credit is in poor shape. To avoid costly interest fees, make sure you’re able to promptly pay back any credit that you take out.

3. SBA Loans

Loans issued by the Small Business Administration (SBA) are another option. The SBA isn’t a business lender itself but a US government entity that works with financial institutions. This means that you can only get this type of loan through an SBA lender.

The idea behind SBA loans is to help stimulate the national economy by making small business lending a little easier. In other words, the government tries to make it easy for lenders to issue loans with favorable interest rates and terms.

This is a huge benefit for you as an entrepreneur. SBA loans are available with most traditional banks, but, be aware that you should still expect a rigorous application process. SBA loans are only available to for-profit businesses, so nonprofits will not be able to qualify.

How to Get a Small Business Loan

In general, you shouldn’t expect to acquire a small business loan unless you’ve been in business for at least a year. While there are exceptions, banks usually want to see that your business is headed in the right direction before they take you on as a borrower.

Then, whether you’re completing an online application or doing it in person — there are certain things you need to have prepared, including tax returns, annual revenue statements, a profit and loss statement, bank statements, and more.

On top of that, here are some other things that are taken into consideration.

Banking Relationship

You have a much better shot at acquiring loan products through an existing business banking relationship. Banks give preferred treatment to their current customers, so if you already have a business bank account, the bank that holds them should be your first stop.

Credit Score

I’ve already mentioned how important good credit is, but it’s worth stating again. In general, your score should be in the 700s to have a realistic chance of snagging a small business loan.

Just like a credit card or personal loan, the higher your score, the more likely your approval, and the better your terms. For example, an excellent credit score can hook you up with a higher loan amount, a lower interest rate, and more favorable repayment terms.

Also, keep in mind that as a small business owner, you actually have two credit scores. The first is your personal score and the other is a separate score that’s specifically tied to your business. You’ll want to stay on top of both scores as you go through this process.

Business Revenue

When a bank issues funds, it’ll want certain assurances that this money will be repaid. The most obvious way for a bank to feel good about extending credit is to demonstrate that your business is profitable.

Some banks even have minimum annual revenue requirements before they even consider taking you on as a borrower. But generally speaking, the more revenue you bring in, the better your approval chances.

Frequently Asked Questions

Which bank is best for a small business loan?

It completely depends on your business needs. For most people, I suggest asking your current bank about your options. You’ll have a better chance of getting approved for a loan, and you can keep all of your business finances in the same place.

While I covered national banks in this post, don’t be afraid to check out community banks and credit unions, too.

Which bank gives business loans easily?

The truth? None of them. Business loans aren’t easy to get, because you need to be able to demonstrate a high likelihood that you can pay them back. That said, if you’re already working with a particular bank (and you’re in good standing), you’ll have a much better shot at approval.

Which bank gives the cheapest business loan?

The cheapest loans you’re likely to find are those issued through the SBA. Since these loans are guaranteed by the government, lenders can issue them with enticing terms and interest rates.

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