Some reasons a small business would want to take a business loan are- expansion of business, acquiring new equipment/inventory or even funding a new round of onboarding process. Even though acquiring a loan and going into debt can be something one needs to consider, there are many benefits of taking a loan. It helps the company better its credit score and look more reputable. This, in turn, would aid the business in seeking more funds in the future.
Nevertheless, one thing that might stop or even discourage small business owners from acquiring a loan is the process of loan application and the amount of research it requires. Finding the right bank with reasonable loan rates for small businesses can be challenging. Furthermore, it is also essential to know certain technicalities when enrolled in the process. This includes some finance-related terms and the kind of loans specially reserved for small businesses. For example, the SBA (Small Business Administration) loan is an excellent resource for small business owners. These loans are granted by the US Small Business Administration and aim to help businesses to grow. This article will look at six banks that provide the best loan rates for small businesses.
Some banks with the best loan rates for small businesses
Bank of America has over 4,200 branches across the US and can be easily accessed anytime, anywhere, through its convenient mobile banking features. Small business owners should consider Bank of America as they provide a range of financing options. Those who have been in the business for more than two years gain a higher preference. It provides both secured and unsecured commercial lines of credit. The minimum limit for the secured line is $25,000, whereas the starting limit for the unsecured line is $10,000. Fix Rate loans are also available with Bank of America.
Regarding Fix Rate loans, the higher income requirement for the secured loan is $250,000 instead of $100,000 for the unsecured choice. In addition, small business loans have minimum two-year business requirements and shorter repayment terms—up to five years—than other banks could provide. Additionally, it also provides SBA loans for small businesses. These come with many benefits for the borrowers, and special offers are also reserved for veterans.
Entrepreneurs may be more familiar with Citibank thanks to its small-business credit cards. Even though the bank has fewer goods than other lenders, it nonetheless provides business loans. The term loans offered by this bank range from $5,000 to $3,000,000. They have fixed interest rates for seven years. Requirements for these loans include a personal guarantee along with other standard requirements. Even though equipment loans are unavailable via Citibank, their term loans can be used for the same purpose. In addition to term loans, it offers two business lines of credit. These range from $10,000 to $3 million. Both types of loans come with various rates and require a personal guarantee. If you are a healthcare practice, you might enjoy certain benefits when carrying out transactions from Citibank.
Even though US Banks are not available in many physical locations, it still is an excellent option for small businesses that have been in operation for less than two years. With collateral, acquiring; loans can be very easy for small business owners, including SBA loans. With regards to seeking SBA loans. US bank is an excellent option as it has granted the second-highest number of 7(a) loan applications as of September 2020. Regarding term loans, $1 million is the fixed rate. You can always seek the Quick Loan process if you wish to use the funds at the earliest. However, choosing the Quick Loan application process comes with a lower borrowing cap of $250,000. For businesses that have been in operation for at least two years, the bank offers a revolving line of credit called CashFlow Manager with a maximum credit limit of $250,000. If the credit line or amount borrowed is less than $50,000, that product includes a $150 yearly fee. In addition to these loans, the US bank also provides a variety of different loans, which are made available for commercial/business use. This includes real-estate loans with a repayment length of five, ten, or fifteen years.
If your small business is more than three years old and fairly established, PNC might be your preferred choice when seeking a business loan. PNC is a preferred SBA lender; however, compared to other banks, it does not offer as many loans. Nonetheless, the bank offers other loans that are great for small businesses. PNC’s lines of credit range from $20,000 to $100,000 for unsecured choices and from $100,000 to $3,000,000 for secured alternatives. Both of these types of loans have varying interest rates. Ideally, the secured line charges 0.25% of the agreed line amount, whereas the unsecured line has an annual fee of $175.
Additionally, PNC also offers both business auto and commercial loans. Commercial real estate loans from the bank have fixed or variable interest rates, up to 10 years of repayment lengths, and range in size from $100,000 to $3,000,000. At the same time, business auto loans are offered for six years and range from $10,000 to $250,000.
Wells Fargo is one of the US’s oldest and most reliable financial institutions. It provides a variety of credit lines and additional small-business financing options. Wells Fargo’s lending limits are lower than some other banks if you have collateral and need financing more significant than $500,000. Well, Fargo might be your first choice if you wish to seek an SBA loan. It is one of the most active SBA loan lenders and, as of September 2020, has approved SBA 7(a) loans totalling more than $114 million. When it comes to lines of credit for businesses, Wells Fargo offers three separate credit lines. This includes one unsecured and two secured by collateral. These lines range from $5,000 to $500,000. With regards to business loans, apart from offering loans on specific products, it also aids in the financing of semi trucks, commercial real estate and equity finance.
Chase provides bank accounts and credit cards for small-business owners and loans to small businesses. In terms of SBA loans, Chase is considered to be an SBA-preferred lender, and it offers a variety of SBA loan types. This includes credit lines and SBA Express loans, which provide quicker funding of up to $350,000. With regards to term loans, Chase offers fixed- and adjustable-rate loans starting at $5,000. The repayment arrangements for the same range from one to seven years.
Additionally, it also provides commercial and business lines of credit. Commercial lines start at $500,000 and have maturities of one to two years that can be extended. The bank also offers other business loans with a duration of seven years. Depending on the business loan, these come with variable or fixed interest rates. In addition, Chase offers several equipment loans. Loans start at the rate of $10,000. Finally, it also provides fixed- or variable-rate commercial real estate loans, with durations as long as seven or ten years with a minimum of $50,000.
As a small business owner, there are indeed a lot of things to worry about daily. However, apart from the other business operations, investments and finances regarding the business are not something that should be stressful. Indeed, they can be slightly tricky to navigate, but hopefully, this article shed some light on the terms surrounding the topic of business loans. The comprehensive list of banks that offer fantastic loan rates for small businesses, should be helpful in picking the right bank.