Comerica is a financial services center headquartered in Dallas, Texas, and has offices in California, Florida, Texas, Michigan, and Arizona. In addition, the bank has select operations in Canada and Mexico as well.
Comerica also offers SBA loans, small businesses, and other types of loans. To contact an SBA officer at Comerica, click here. Below we have discussed the features of the SBA loan offered by Comerica and the types of SBA loans that most banks generally lend.
Comerica Small Business Administration (SBA) Loans
Purpose
- Expansion of the business
- Purchasing of real estate and equipment
- Refinancing debt
Features
- Less money down (Could be up to 90 %)
- Loan payback time is longer (As high as 25 years)
- No balloon payments
- Fully amortized
- Interest rates are competitive
Types of Loans offered by Comerica Bank
1. Small Business Loans (SBA)
Purpose
- Expansion of the business
- Purchasing of real estate and equipment
- Refinancing debt
Features
- Less money down (Could be up to 90 %)
- Loan payback time is longer (As high as 25 years)
- No balloon payments
- Fully amortized
- Interest rates are competitive
2. Term Loans
Purpose
- Improving or purchasing property
- Purchasing of inventory, equipment, and transportation
- Enhancing business operations
- Supplier credit terms change
- Beneficial for buying inventory seasonally
- Project costs
Purpose
- Management of daily operations and cash flow
- Purchasing of inventory, equipment, and transportation
- Enhancing business operations
- Supplier credit terms change
- Beneficial for buying inventory seasonally
- Project costs
Features
- Monthly payment is fixed
- The loan term is fixed (two to five years)
- The interest rate is fixed
- Several collateral choices
3. Business Line of Credit
Purpose
- Management of daily operations and cash flow
- Purchasing of inventory, equipment, and transportation
- Enhancing business operations
- Supplier credit terms change
- Beneficial for buying inventory seasonally
- Project costs
Collateral options
- Cash and other marketable securities
- Owner-occupied residential or commercial real estate
- Business assets
- Existing or new equipment
- Real estate
4. Paycheck Protection Program (PPP) Loan Forgiveness
- Loans are only considered forgivable if the businesses/borrowers meet the retention criteria.
- The funds can be used for payroll, expenses, and mortgage costs, during the 8 to 24 week disbursement period.
- Some PPP loans mature in two years while others mature in five years, and they require no personal guarantee and collateral.
Comerica Interests, Fees, and Loan Options
1. SBA (7A)
- Interest Rate: 4.25 % for < 25,000 dollars, 3.25 % for 25,0001 to 50,000 dollars, 2.25 % for > 50,0001
- Fees: 0.25 % (short-term loan) 3.5 % (1000,000 dollars)
2. SBA/CDC 504 Loan Program
- Interest Rate: 2.4 % (Ten-year term), 2.35 % (25-year term), 2.41 % (also for 25-year term)
- Fees: 0.25 % (Loan servicing) 0.5 % (SBA Guarantee)
3. Paycheck Protection Program (PPP) Loan Forgiveness
- Interest Rate: 1 %
- Fees: 50 % for <50,000 dollars, 5 $ for >50,000 dollars and 3% for loans >350,000 dollars
4. Term Loans
- Interest Rate: Fixed and Flexible
- Fees: Monthly payments
5. Business Line of Credit
- Interest Rate: 8.5-80 % (Medium-term loans), 7-30 % (Online term loans) 7-99 % (Merchant cash advances)
- Fees: None
What Lending Criteria does Comerica Have?
Below is the basic lending criteria that all the banks follow:
- Credit Score
- Annual Revenue
- Business Plan
- Collateral
- Time in Business
Credit Score
Credit is the most important component of all types of businesses, whether they are small or large. Lenders will always analyze the business's credit score and then decide whether it can pay the loan or not. Therefore, the best way to maintain a healthy credit score is to pay your dues on time.
Credit scores can also be easily obtained from several agencies such as Equifax, Dun & Bradstreet, and Experian. Another way of maintaining a positive credit score is to have a low debt-to-income ratio. Lenders will not invest in businesses that don't have a good credit score.
Annual Revenue
Another important factor that the lenders will review is the annual revenue of the business. Most lenders will only lend to those businesses that have been profitable for the last two years or more. Businesses need to make sure that all the financial statements are accurate and up to date.
Lenders will also look at specific details such as the current account (current assets divided by liabilities) and ask for copies of bank statements and transactions. However, businesses will only be eligible for a loan if their cash flowing is growing.
Business Plan
A minority of lenders might not ask for a business plan, but most of them do, and businesses need to come with a clear and concise proposal. Usually, lenders require the business plan to know the purpose of the loan and discuss the business's stability.
One of the main components of business plans is the resumes of managers and staff. However, despite having a clear business proposal, the lenders will still ask for proof of the staff's ability and relevant credentials and experience.
Collateral
Collateral is an essential requirement, and most lenders will not provide a business loan if it cannot give collateral. Collateral can be anything like equipment or property. The collateral will also decrease the risk for the lender as it will have an asset in hand, so if the company fails to pay the loan, the collateral can be paid to fund the damages.
The owner of the company needs to provide a personal guarantee and will also need to submit some essential documents:
- Driver’s license
- Business license
- Tax returns (personal)
- Tax returns (business)
- Insurance plans of business
- Records for payroll
- Detail of owner
- Other financial obligations
Time in Business
Most banks are hesitant to lend loans to new companies that have been active for just a few months. Lenders cannot trust small businesses or startups that have just entered the market because they don't have a proper credit score and the cash flow is usually unstable. Banks will most likely lend to businesses that have been active for more than two years.
Eligibility Criteria for Paycheck Protection Program
Following borrowers qualify for loan forgiveness during the 8 to 24 period of loan disbursement:
- Compensation and employee levels are maintained
- 60 % of the funds are business expenses such as payroll costs
Loan Forgiveness Criteria
In Round 2 of the PPP loan program, the criteria for forgiveness were also revised. Under the new changes, the businesses/borrowers spent 60 % instead of 75 % of the loan on their business needs (payroll expenses, mortgage costs, rent).
Eligibility Criteria for Paycheck Protection Program
Following borrowers qualify for loan forgiveness during the 8 to 24 period of loan disbursement:
- Compensation and employee levels are maintained
- 60 % of the funds are business expenses such as payroll costs
Comerica Application
Following is the application procedure of all the banks that borrowers have to follow:
Before you apply for a loan, ensure that all your documentation is up to date. Also, organize all the documents properly, and if some essential documents are missing, contact the relevant authorities. Collect all the financial information about your business and pay all the dues as soon as possible.
- Personal and Business credit scores and history
- Account statements of the business
- IRS documents, tax returns of the business, and the owner as well.
- Other important financial documents such as unpaid invoices, credit card details, and accounts receivable.
- Legal contracts (leasing, franchising, incorporation)
For more information, please log onto the website of Comerica. Click here.
Requirements for SBA (7a)
- Businesses should operate for 'For-Profit.'
- Business should be active only in the United States
- Significant invested equity
- Can use alternate financial resources (personal assets)
- Should be able to demonstrate loan need
- Funds should only be used for business purposes
Requirements for SBA (504)
- Businesses should operate for 'For-Profit.'
- Business should be active only in the United States
- Has a net worth of fewer than 15 million dollars and more than 5 million dollars
- Be an eligible business. Check here.
- No other sources of finances should be used other than the 504 loan
- Funds should only be used for business purposes
Summary of Comerica Loan Options
Comerica is one of those banks that is really helping out struggling businesses during the pandemic, especially small businesses. While the Paycheck Protection Program (PPP) has ended, the bank will still help the borrowers through the PPP loan forgiveness initiative. Below is a list of the types of loans that Comerica offers:
- Small Business Administration (SBA) Loans
- PPP Loan forgiveness
- Term Loans
- Business Line of Credit
Interest and fees vary depending on the loan amount; unfortunately, Comerica has not stated an official amount. For PPP loan forgiveness, interest is fixed at 1 %, whereas the fees vary. Interest rate is also fixed and flexible for Term loans, and payments are to be paid monthly.
Business lines of credit interest rates depend on the type of loans, such as:
- Medium-term loan
- Online term loan
- Merchant cash advances
Usually, fees are not charged for business lines of credit; however, some banks might charge an annual fee. As always, study all the details and procedures thoroughly, discuss them with the bank, make sure you fulfill all the requirements, and then apply for the loan.