Bank of America Reviews - Financial Lender Pros & Cons
Bank of America is one of the biggest banks not only in the US but all over the world. It has a rich history of 240 years. With the merger of Bank America and NationsBank in 1998, it became the largest bank across the U.S. It is now a worldwide financial services company that serves small businesses with a range of financial options.
Bank of America services about 66 million business organizations and customers through its 4,300 branches. It is the largest consumer deposit investor in the United States and the largest small business lender.
- Fair rates for short-term loans.
- Small minimums for leasing equipment
- Higher credit discounts for businesses with better credit score
- Long-term financing options are available
- Bank of America is a conventional lender, only approves businesses with A profile
- Automated underwriting process
- Strict on payment times
- The application process is slow
Line of Credit
For the credit lines of Bank of America, customers have two options: secured, or guaranteed and unsecured credit lines. Secured lines of credit require collateral that can be seized when the borrower is unable to repay the loan.
Unsecured lines of credit, on the other hand, is a good option for businesses seeking a line of credit loan as it does not require any collateral. On the downside, however, it is much more difficult for businesses to qualify for unsecured lines of credit. However, this means that the APR will be higher and that the personal property, whatever it is, can be seized if the customer does not repay the loan.
Unsecured business lines of credit are easier to obtain if the customer wants to borrow $100,000 or less. Borrowers can secure their line of credit using a general asset lien or a deposit certificate. A line of credit can be backed by a certificate of deposit which allows the customers to borrow up to 100% of the value of the deposit.
Secured Business Loans
These loans start at $25,000 to meet various operational needs of the business such as buying inventory or equipment, financing accounts receivable, or refinancing debt. As the name implies, these Bank of America small business loans are "secured", which means the customer can choose to secure a loan with a privilege of their assets or a deposit certificate.
Once a secure business loan is obtained, the customer gets to know the terms they will get on the loans:
- Bank of America term loans guaranteed by a general lien on general commercial assets shall have a maximum term of three years.
- Bank of America term loans secured by a certificate of deposit have a maximum maturity of five years.
- After this, the customer will repay the loan according to a monthly repayment schedule, automatically deducted from the checking account of Bank of America.
Before reducing the cash flow of business by paying out of pocket for major equipment purchases, consider financing the equipment purchase with a lender like Bank of America. Bank of America can fund up a business up to 80% of the purchase price of different types of equipment:
- Light-industrial equipment
- Heavy-industrial equipment
- Commercial vehicles greater than 2.5 tons
As with most equipment lending, Bank of America does not require any security on its equipment financing proceeds. Rather, the equipment purchased by the small business serves as a guarantee on the loan. If the business is unable to repay Bank of America, the bank will simply seize the company's piece of equipment. When a piece of equipment is borrowed from Bank of America, the duration of the loan will be for up to five years.
By guaranteeing the SBA loan by Bank of America, the SBA minimizes the risk of the bank. Depending on the SBA loan, the bank can guarantee up to 85% of the funding. So if a business is not able to repay the loan, SBA has to meet its guaranteed share and recover most of Bank of America's losses.
Simply put, when a customer gets an SBA loan, he is dealing with two financing firms the SBA lender and Bank of America. Ultimately, Bank of America is more likely to approve loans to small enterprises.
Bank of America generally requires companies to have $1.25 of income to sustain each dollar of debt. This additional $0.25 padding gives a business some flexibility to cover unexpected expenses along the way.
Bank of America will also check the capital of the business, such as the money and equipment. The Bank will also be interested in how much money the business makes and would want to know more about the kind of investments made in the business.
The bank also wants to know if the business has sufficient capital to finance the business expenses. Also, reviewing the business capital investments helps the bank evaluate whether the business has a bright future or not.
Terms and Conditions
Before giving loans to small enterprises, the bank will take into account the state of the current economy of the business, what is happening in the industry, and any outstanding legislation that may affect the customer’s ability to make payments.
Plain and simple, Bank of America has the long-time financial health and prospects of the business it’s lending out to, in mind. Bank of America considers the economic and industrial conditions of the business to determine whether the business will be able to make payments in the future or not.
Can Bank Of America Business Loan Fulfill Your Business Needs?
It depends on the financial requirements of the business whether Bank of America business loans can cover up the expenses or not. The best commercial loan for a business is the one that meets its financial requirements. If the customer is eligible for one of these small business loans through Bank of America, it is important to obtain comparison offers from multiple lenders. Other banking options to consider include Chase Business Loans and American Express Small Business Loans.
Bank of America provides working capital to small businesses that can be used to fund everyday expenses.
The Bottom Line
Bank of America can offer a broad array of financial solutions at an affordable rate. If your business is in need of working capital or a line of credit, Bank of America will be the right lender for you.