Bank of America Small Business Financing Products to Help Smooth Cash Flow

Bank of America Small Business Financing Products to Help Smooth Cash Flow

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Advertiser & Editorial Disclosure

Bank of America® serves more than 3 million small business customers. They lent nearly $10.7 billion in new credit to small businesses in 2015, and came in at number 48 on the U.S. Small Business Administration’s list of 100 top preferred SBA lenders in FY 2016 for their most popular small business funding source, the 7(a) loan program.

Bank of America offers a wide variety of lending products to established small business customers, including secured business loans, equipment financing, commercial real estate loans, vehicle loans and leases, and more. These options are available to applicants who have owned their business for at least two years and have an existing Bank of America deposit account.

Here are two financing products offered by Bank of America that are good options for business owners looking to improve cash flow: a business line of credit and business credit cards.

Bank of America Business Line of Credit

Editor’s note: This article was accurate as of publication date. Terms and fees may have changed. Review full terms before you apply.

A business line of credit is a solid source of financing for various short-term financing needs, such as making payroll or taking advantage of a great deal on inventory. The advantage of a business line of credit is that it’s there when you need to draw from it, but you only pay interest when you draw money from your line, and interest is only applied to the amount you borrow.

Here’s a snapshot of Bank of America’s business line of credit details:

  1. Amount: $10,000 and up, $5M maximum for a line of credit secured by real estate
  2. Repayment term: Up to 5 years, depending on how you secure your loan
  3. Requirements to qualify: 2 years in business under the current owner. Applicants must have a Bank of America deposit account—you do not need a business checking account to apply, but you if you are approved you will need to open one before the loan is closed. Rates will in part be determined by your overall business relationship with BofA.
  4. Uses of the line of credit: improving cash flow, on-demand working capital, financing accounts receivable
  5. Rates: Rates are variable, and competitive based on the prime rate. To give you an idea, typical business line of credit rates range from 7% to 25%, plus additional fees. Bank of America applies this fee structure to their upfront fees and annual renewal fees: $150 upfront fee for credit lines up to and including $100,000. The upfront fee is $250 for amounts between $100,000 and $250,000, and 0.5% of the line for amount above $250,000.
  6. Turnaround time: After all documents have been gathered and the application has been submitted, it will typically take about 1 week for Bank of America to make a decision.
  7. Collateral required: Amount above $100,000 must be secured by a blanket lien on general assets (meaning you agree to hand over any and all types of assets in the event that you cannot pay) or by a certificate of deposit. Amounts under $100,000 may be unsecured.
  8. Online application: No. Once you are approved, you can access funds online or over the phone.

If you have good credit, a Bank of America deposit account (or are willing to open one), and are seeking a flexible way to access extra cash for your business in the future, this could be a good option for you. This isn’t a good option for young businesses and business owners with poor personal credit who will not qualify, and if you’re in a cash flow crunch looking for emergency financing now, then you should take a look at other options that will have a faster turnaround time.

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Bank of America Business Credit Cards

Business credit cards can be a flexible, low-cost financing product that can help even out cash flow. And as far as payment methods go, they offer superior fraud protection.

One of the most appealing aspects of Bank of America’s business credit cards is that they extend protections normally only required on consumer cards to their business cards. In fact, Bank of America is the only major issuer to have extended all of the main CARD Act protections to its business credit cards. (These include, among other things, no interest rate hikes on outstanding balances, or floating due dates that sometimes trip up borrowers.) Additionally, they generally do not report business card activity to consumer credit bureaus, so balances on your Bank of America business credit card won’t affect your personal credit scores, and negative payment data coming from your small business credit card will not show up on your personal credit reports.

Another aspect of Bank of America business credit cards worth noting is that they do share payment information, both positive and negative, to one of the business credit reporting databases; thus your transactions may affect your business credit scores.

Here are two Bank of America card offers that could help in a cash flow crunch:

 

Bank of America® Business Advantage Cash Rewards Mastercard® credit card

Bank of America® Business Advantage Cash Rewards Mastercard® credit card

Get a $200 statement credit when you make at least $500 in net purchases within 60 days of Learn More

If you spend a significant part of your business budget on restaurants, gas stations, and office supply stores, the Bank of America® Business Advantage Cash Rewards Mastercard® credit card could be a good option for you. Business owners can earn 1% cash back on all other purchases. 2% cash back on purchases at restaurants. 3% cash back on purchases at gas stations and office supply stores (up to $250,000 each calendar year, 1% after that).. There is an unlimited 1% cash back on all other purchases.

This card offers an intro purchase APR of 0% for 9 billing cycles, but the ongoing APR is on the higher side, so if you expect to carry a balance this may not be the best card for you. Additionally, there is a foreign transaction fee of 3% of the U.S. dollar amount of each transaction, so if you’re a frequent international traveler, or you make frequent purchases from companies based outside the U.S., a card with no foreign transaction fee may be better suited for your needs.

The benefits of this card include:

  • $0.00 annual fee
  • A cash back program with a relatively high rewards cap.
  • Intro APR: 0% for 9 billing cycles.
  • No penalty APR, however penalty fees are up to Up to $49 as of February 19th 2018, depending on the amount of the late payment, and a flat $39 as of February 19th 2018 returned payment fee.
  • Business owners do not need to have a Bank of America® account to collect cash rewards—redeem them to your card or directly to your B of A savings or checking account.

And the downsides are:

  • A somewhat high ongoing purchase APR.
  • An international transaction fee of 3% of the U.S. dollar amount of each transaction.
  • See full terms here: Terms and Conditions as of March 29th 2018

If you are a Bank of America small business customer looking for financing and aren’t in a time crunch for it, we recommend to talk to your banker about financing options best suited for you, including their business line of credit.

Bank of America® Platinum Visa® Business credit card

Bank of America® Platinum Visa® Business credit card

Get a $200 statement credit when you make at least $500 in net purchases within 60 days of Learn More
Editor’s note: This article was accurate as of publication date. Terms and fees may have changed. Review full terms before you apply.

This card may be good for business owners who anticipate they may carry a balance on their card from time to time and want to keep interest costs low. The purchase APR may be low depending on risk level they assign to your business, but watch out for other fees associated with the card, and be sure to shop around for other options that may have even lower purchase APRs.
Benefits of this card include:

  1. $0.00 Annual Fee
  2. 0% for 7 billing cycles

Downsides:

  1. No rewards program offered
  2. Penalty fees for late payments and returned payments (See Terms and Conditions as of March 29th 2018 here).
  3. Foreign Transaction Fee of 3% of the U.S. dollar amount of each transaction.

If you need to smooth out your cash flow quickly and can qualify for Bank of America’s cards, business credit cards offer a quick approval decision and a low cost way to access a short-term source of credit.

Be weary that applying to multiple sources for funding can ding your credit. Nav can help you understand which financing options you are most likely to qualify for before you submit an application, all without hurting your credit scores. Nav’s MatchFactor uses a proprietary algorithm, along with machine learning, to instantly filter and display dozens of financing options and credit cards you’re most-qualified to receive. Businesses who use MatchFactor are four times more likely to be approved for financing when they need it. Sign up for a Nav account now to see your matches.

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About the Author — Lydia serves as Content Manager for Nav, which provides business owners with simple tools to build business credit and access to lending options based on their credit scores and needs.

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