A decade ago, banks were the first place you’d go to if you wanted a business loan. But after the 2008 recession, things changed. Banks started tightening access to credit and adding stricter qualification criteria for loans. As a result, very few small business owners were able to get the funding they needed from banks.
Fortunately, there’s been a resurgence in bank lending to small businesses. Large banks now approve a quarter of small business loan applications, and regional and community banks approve nearly one half of small business loan applications.
Although things are looking up for business owners who want to apply for bank loans, these stats indicate that your choice of bank matters. Some banks have a proven reputation for helping small businesses and are more committed to working with small businesses.
We rank the best banks for business loans and tell you what you need to qualify and apply. If a bank loan isn’t a viable option for your business, we’ll help you find alternative options.
Quick Jump To...
What Banks Can Offer Small Businesses
The Best Banks for Conventional Business Loans
The Best Banks for SBA Loans
How to Qualify for Bank Financing
The Best Alternatives to Bank Business Loans
Before we dive deep into the list of the best banks for business loans, let’s run through some basics about bank commercial loans, so you know what type of loan you’re going to get.
What Can Banks Offer Small Businesses?
If you can get a bank loan to fund your business, you should probably take it. Both national banks and community banks offer low interest rates and long terms on loans, compared to anything you’re likely to find online through non-traditional lenders.
Interest rates on bank loans increase when the economy is doing well, but in general, you can expect an interest rate around 4% to 10% on bank loan products. Terms also vary, but banks tend to provide long-term financing with manageable monthly payments.
Here is a brief look at the main types of business loans available through banks:
Term Loans
Term loans are the basic type of business loan. These loans provide capital that you pay back monthly over a set number of years. Term loans can be secured with business assets or unsecured.
SBA Loans
More than 3,000 banks nationwide offer loans guaranteed by the Small Business Administration (SBA). The SBA guarantee make financing available to startups and small businesses that otherwise wouldn’t be able to get loans. SBA loans can be used for business expansion, real estate and equipment financing, working capital, and various other purposes.
Business Lines of Credit
With a business line of credit, a lender approves you for a pool of funds, which is called your credit line. You can draw from the line whenever you want or need to, and you pay interest only on the money you draw. Lines of credit can also be secured with business assets or unsecured.
Equipment Loans
Many banks offer vehicle and equipment financing as well, perfect if you want to buy or lease new or used equipment. Banks can finance 80% to 100% of the cost of your equipment, so you don’t have to put up a big down payment.
Business Credit Cards
Many banks have added business credit cards to their line of financing products. Business credit cards give business owners a convenient pay to make purchases. Many banks offer rewards points and introductory interest rates as incentives on their credit cards.
As you can see, banks offer a range of business loan products, with cost and terms that are favorable to borrowers. But there are a couple catches. One is that all of these types of financing can be a challenge to qualify for, reserving bank loans for business owners with the best credit. The other catch is that bank loans are a long process, definitely not designed for business owners who need funding fast.
But if you’re willing to overlook these downsides, getting a bank loan can be a huge win for your business and set you up for success. Next up, our rankings of the best banks for business loans.
Fortunately, there’s been a resurgence in bank lending to small businesses. Large banks now approve a quarter of small business loan applications, and regional and community banks approve nearly one half of small business loan applications.
Although things are looking up for business owners who want to apply for bank loans, these stats indicate that your choice of bank matters. Some banks have a proven reputation for helping small businesses and are more committed to working with small businesses.
We rank the best banks for business loans and tell you what you need to qualify and apply. If a bank loan isn’t a viable option for your business, we’ll help you find alternative options.
Quick Jump To...
What Banks Can Offer Small Businesses
The Best Banks for Conventional Business Loans
The Best Banks for SBA Loans
How to Qualify for Bank Financing
The Best Alternatives to Bank Business Loans
Before we dive deep into the list of the best banks for business loans, let’s run through some basics about bank commercial loans, so you know what type of loan you’re going to get.
What Can Banks Offer Small Businesses?
If you can get a bank loan to fund your business, you should probably take it. Both national banks and community banks offer low interest rates and long terms on loans, compared to anything you’re likely to find online through non-traditional lenders.
Interest rates on bank loans increase when the economy is doing well, but in general, you can expect an interest rate around 4% to 10% on bank loan products. Terms also vary, but banks tend to provide long-term financing with manageable monthly payments.
Here is a brief look at the main types of business loans available through banks:
Term Loans
Term loans are the basic type of business loan. These loans provide capital that you pay back monthly over a set number of years. Term loans can be secured with business assets or unsecured.
SBA Loans
More than 3,000 banks nationwide offer loans guaranteed by the Small Business Administration (SBA). The SBA guarantee make financing available to startups and small businesses that otherwise wouldn’t be able to get loans. SBA loans can be used for business expansion, real estate and equipment financing, working capital, and various other purposes.
Business Lines of Credit
With a business line of credit, a lender approves you for a pool of funds, which is called your credit line. You can draw from the line whenever you want or need to, and you pay interest only on the money you draw. Lines of credit can also be secured with business assets or unsecured.
Equipment Loans
Many banks offer vehicle and equipment financing as well, perfect if you want to buy or lease new or used equipment. Banks can finance 80% to 100% of the cost of your equipment, so you don’t have to put up a big down payment.
Business Credit Cards
Many banks have added business credit cards to their line of financing products. Business credit cards give business owners a convenient pay to make purchases. Many banks offer rewards points and introductory interest rates as incentives on their credit cards.
As you can see, banks offer a range of business loan products, with cost and terms that are favorable to borrowers. But there are a couple catches. One is that all of these types of financing can be a challenge to qualify for, reserving bank loans for business owners with the best credit. The other catch is that bank loans are a long process, definitely not designed for business owners who need funding fast.
But if you’re willing to overlook these downsides, getting a bank loan can be a huge win for your business and set you up for success. Next up, our rankings of the best banks for business loans.
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