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Read More Jul 10, 2023 Filed under: Accounting, Bookkeeping, Invoicing, Small Business
The 5 Best Banks For Small Business Loans In 2023
Wondering which banks are best for small business loans? These five institutions offer small business bank loans at reasonable rates.
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Expert Analyst & Reviewer
UPDATED
Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
If you’re considering getting a loan to fund your small business, the first source that may come to mind is a bank. Banks have deep pockets, offer in-house checking and savings accounts, and usually offer better rates than alternative lenders. The best banks for small business loans may be more accessible than you realize.
Since you’re likely to face strict credit requirements and geographic constraints, you might consider seeking a loan from the bank you currently use, as they already know you and your financial profile. However, the economy of scale offered by big national banks can possibly get you a better deal, provided you meet their stringent qualifications.
Unfortunately, if your credit score is under 600 or your business hasn’t been around long, you may not qualify for a bank loan.
But if you have a solid credit score and steady revenue, you can take advantage of low rates, long repayment terms, and a variety of financial products. Read on to see our picks for the best banks for small business loans.
Learn More About Our Top Picks
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Table of Contents [hide][show]
- The 5 Best Banks For Small Business Loans
- 1. Wells Fargo: Easiest Bank For Business Loans
- 2. Chase Bank: Best Bank For Startups
- 3. U.S. Bank: Overall Best Bank For Small Business Loans
- 4. Bank Of America: Best Bank For SBA Loans
- 5. TD Bank: Best Big 4 Alternative
- Our Methodology For Choosing The Best Banks For Small Business Loans
- Types Of Business Loans Offered By Banks
- How To Qualify For A Small Business Bank Loan
- Alternatives To Small Business Bank Loans: Online Lenders & Nonprofits
- Small Business Bank Loan FAQs
- Our Top Banks For Business Loans
- In Summary: The 5 Best Banks For Small Business Loans
Table of Contents
- The 5 Best Banks For Small Business Loans
- 1. Wells Fargo: Easiest Bank For Business Loans
- Why We Chose Wells Fargo For Easy Small Business Loans
- Wells Fargo Features
- Wells Fargo Interest Rates & Fees
- Wells Fargo Eligibility Requirements
- Wells Fargo Repayment Terms
- 2. Chase Bank: Best Bank For Startups
- Why We Chose Chase Bank For Startup Loans
- Chase Bank Features
- Chase Bank Interest Rates & Fees
- Chase Bank Eligibility Requirements
- Chase Bank Repayment Terms
- 3. U.S. Bank: Overall Best Bank For Small Business Loans
- Why We Chose U.S. Bank As The Best Overall Bank For Small Business Loans
- U.S. Bank Features
- U.S. Bank Interest Rates & Fees
- U.S. Bank Eligibility Requirements
- U.S. Bank Repayment Terms
- 4. Bank Of America: Best Bank For SBA Loans
- Why We Chose Bank Of America For SBA Loans
- Bank Of America Features
- Bank Of America Interest Rates & Fees
- Bank Of America Eligibility Requirements
- Bank Of America Repayment Terms
- 5. TD Bank: Best Big 4 Alternative
- Why We Chose TD Bank As The Best Big 4 Alternative
- TD Bank Features
- TD Bank Interest Rates & Fees
- TD Bank Eligibility Requirements
- Repayment Terms
- Our Methodology For Choosing The Best Banks For Small Business Loans
- Types Of Business Loans Offered By Banks
- How To Qualify For A Small Business Bank Loan
- Alternatives To Small Business Bank Loans: Online Lenders & Nonprofits
- Small Business Bank Loan FAQs
- Our Top Banks For Business Loans
- In Summary: The 5 Best Banks For Small Business Loans
The 5 Best Banks For Small Business Loans
When looking at the “best” banks for small business loans, we’re considering a combination of excellent rates and accessibility. While you may well be able to get a better deal from your local community bank or credit union, we wanted to spotlight banking institutions that cover large portions of the country to ensure that there’s a decent probability that one or more of them will be operating in or near your area.
1. Wells Fargo: Easiest Bank For Business Loans
Wells Fargo Business Loans |
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Pros
- Multiple types of financing
- Low rates
- Easy online application process
- Multiple branches nationwide
Cons
- Strict credit requirements
- Funds can take weeks to be disbursed
Get Started With Wells Fargo Business Loans
2. Chase Bank: Best Bank For Startups
Chase Bank Business Loans |
|---|
Pros
- Low-interest rates
- Few extra fees
- Multiple types of financing
- Loans for startups & established businesses
Cons
- Not available in all states
- Strict credit requirements
- Slow application process
Get Started With Chase Bank Business Loans
3. U.S. Bank: Overall Best Bank For Small Business Loans
U.S. Bank Business Loans |
|---|
Pros
- Multiple types of financing
- Low-interest rates
- Few extra fees
- Good customer service & support
Cons
- Strict credit requirements
- Not available in all states
Get Started With U.S. Bank Business Loans
4. Bank Of America: Best Bank For SBA Loans
Bank Of America Business Loans |
|---|
Pros
- Multiple types of financing
- Low-interest rates
- Good customer service & support
Cons
- Not available in all states
- Strict credit requirements
- Slow application process
Get Started With Bank Of America Business Loans
5. TD Bank: Best Big 4 Alternative
TD Bank Business Loans |
|---|
Pros
- Excellent customer service
- No origination fees on loans under $100K
- Competitive interest rates
Cons
- Not available in all states
- Strict credit requirements
Get Started With TD Bank Business Loans
Our Methodology For Choosing The Best Banks For Small Business Loans
We looked into over a dozen banks when choosing the best ones from which to seek a small business loan. Given that many banks disclose little to no information about their loan products online, this proved to be a bit of a challenge. However, we were able to gather pertinent information on the loans offered by a number of banks, and we assessed these banks based on their degree of nationwide coverage, the variety of loan types on offer, the ease with which you can apply, and public reputation.
We considered rate information as well, but in a few instances, we chose a bank based on other considerations even when no rate information was provided.
Types Of Business Loans Offered By Banks
As traditional lending institutions, banks usually offer a full spectrum of financial prospects to their customers. None of these are inherently “better” than any other, but they each come with their own sets of qualifications and terms that may make one product the superior choice for a specific business.
How To Qualify For A Small Business Bank Loan
So you like what you see and want to work with a bank? Well, there’s a reason the alternative lending market exists, and it’s because getting a bank loan can be quite challenging these days. If you want to maximize your chances of being approved, here are some things you can do.
Watch & Repair Your Credit
Traditional lenders care about traditional markers of trustworthiness, and that, unfortunately, means you’re going to need good credit. If your credit isn’t in the high 600s or better, most banks will be hesitant to take a risk on you.
Check your credit score via a free credit score site. And if your credit needs work, learn how to improve your personal credit score. You might also want to check out our 10 favorite business loans for startups with bad credit.
Have A Business Account With The Bank
If you don’t look like a fantastic borrower on paper, you can still build a relationship with your prospective bank by being a customer. Not only can this give you room to negotiate, but it will also make it easier to apply when you’re ready. Additionally, some banks will only lend to customers who have accounts with them, regardless of how good your credit is.
Watch Your Cash Flow
It should be obvious, but banks don’t want to lend to customers who are financially unable to pay back their loans. Formulae vary from bank to bank — for example, Wells Fargo likes to see $1.50 in revenue for every $1 you borrow — but you’ll want to make sure you have some margin for error for making your payments. Learn how to calculate your debt service coverage ratio (DSCR), so you can assess whether you’re a good candidate for a bank loan.
Have A Good Track Record As A Business Owner
Most banks will want to see that you’ve been able to keep a business afloat for a while. That means having been in business for two to three years, minimum. If you need help before that, you may want to look at alternative business lenders.
Have Documentation Ready
If you’re applying to a bank where you also have business accounts, you’ll save some labor here. However, you’ll still need to be ready to produce a host of documents (doubly so if you’re applying for an SBA loan). These are things such as tax returns, proof of business registration, personal identification, financial statements, collateral (if applicable), information on any other loans you might have, and your business plan. We recommend that you learn how to write a good one-page business plan before you apply for a loan.
Alternatives To Small Business Bank Loans: Online Lenders & Nonprofits
Have banks rejected you? Did you read the above section and are now worried you probably won’t qualify for a small business bank loan? Do you need money faster than most banks can deliver it? Are you just starting and need a cash infusion?
You’re not alone. In fact, there’s a large market for people like you.
How Online Lenders & Nonprofits Are Different From Banks
Since the Great Recession tightened lending standards a decade ago, an alternative online market has grown that’s focused on getting money to businesses with poorer qualifications. Banks themselves, or investors with an appetite for risk, usually finance these companies. They also tend to have much easier and quicker applications, making them appealing to businesses that need money immediately.
Of course, this comes with a trade-off. While the seedier alternative lenders tend to fail over time, you still want to enter the alternative market with caution. Even honest and transparent lenders will (probably) have higher rates than a bank would offer you. Your credit score will be less of a factor here, but still, the better your credit score is, the better the rates you can expect.
The other option is to look at programs offered by nonprofits. Of particular interest will be the loans provided by Community Development Financial Institutions (CDFIs). These may be banks, credit unions, loan funds, or even venture capitalists certified by the CDFI Fund. CDFIs are often open to new businesses — even most online lenders shy away from businesses that haven’t been around for at least six months — and usually have good interest rates, though not as good as those of banks. Just be prepared for a lengthy application process as you try to match your needs with those of existing programs.
Where To Find Online Lenders & Nonprofits
Online lenders are very easy to find. In fact, it’s almost impossible not to stumble across them if you do business at all online. However, finding the ones you want to work with will probably take a little research. Merchant Maverick can give you a head start with that; check out our choices for the best small business loans. And for even more options, see our complete list of startup business loan reviews.
Nonprofits are a different ballgame. Most operate on a local rather than national level, so you may have to do some research to find the ones in your area. The easiest way to do this is to use the CDFI locator on the Opportunity Finance Network or CDFI Fund websites.
Small Business Bank Loan FAQs
Our Top Banks For Business Loans
The banks listed in this article are, according to what we’ve found, the best banks for small business loans. Of course, banks also offer business bank accounts, which can be crucial to managing your business finances.
We suggest checking out our list of the top 12 business banking account providers. For even more providers, see our full directory of business bank account reviews.
In Summary: The 5 Best Banks For Small Business Loans
- Wells Fargo Business Loans:
- Offers lines of credit, SBA 7(a) & 504 loans, and commercial real estate loans
- Rates for lines of credit start at prime + 1.75%
- 8,000+ branches in 37 states
- Chase Bank Business Loans:
- Offers lines of credit, long-term loans, commercial real estate loans, and SBA 7(a), 504, & Express loans
- No rate information disclosed
- 5,000+ branches in 48 states
- U.S. Bank Business Loans:
- Offers quick fixed-rate loans, term loans, commercial real estate loans, and SBA 7(a) & 504 loans
- Rates for quick loans start at 5.99%
- 3,500+ locations in 28 states
- Bank Of America Business Loans:
- Offers term loans, lines of credit, commercial auto loans, equipment loans, commercial real estate loans, and SBA 7(a) & 504 loans
- Rates for lines of credit start at 5.25% (4.5% for secured credit lines)
- 4,000+ locations in 37 states
- TD Bank Business Loans:
- Offers term loans, lines of credit, and SBA 7(a) & 504 loans
- No rate information disclosed
- 1,100+ locations in 16 states
Jason Vissers
Expert Analyst & Reviewer at Merchant Maverick
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.
View Jason Vissers's professional experience on LinkedIn.
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