Chase vs. Bank of America: Which small business lender is right for you?

Chase and Bank of America may be worth considering if you’re looking for a bank business loan. They are two of the biggest banks in the country and have several top-of-the-line lending options for small companies with great credit and strong revenue. Compared to online lenders, these loans come with low interest rates and favorable repayment terms.

Chase stands out for its smaller starting loan amounts across all its loans and business credit cards. Bank of America’s standout options include a cash-secured line of credit to help you build your business credit score. And its Preferred Rewards for Business program offers generous perks for its members.

We’ll break down the details for Chase and Bank of America business loans to help you choose the best one for your needs.

Chase vs. Bank of America at a glance

Both Chase and Bank of America offer similar business loans, though Chase has the edge when it comes to smaller loan amounts and longer repayment terms for some loans. Bank of America is a stronger choice if you want to build credit or already bank with the company.

Chase business loans

Chase offers several business loans, including term loans, business lines of credit and commercial real estate financing. These loans are available in all states except Alaska and Hawaii.

One area where Chase excels is in smaller loan amounts. With its term loan, you can borrow as little as $5,000 at a time, and with its commercial mortgages, you can borrow as little as $50,000. These are relatively low minimums for a major bank to offer, which can be helpful for companies that only need a microloan to cover working capital.

Chase also offers large term loans with repayment periods of seven years, which is longer than other lenders. If you want an even longer term, you can get an SBA loan with a term of up to 25 years. Many banks only offer SBA 7(a) and 504 loans. But Chase also offers SBA Express loans which are SBA term loans and lines of credit that don’t require SBA approval, significantly shortening the timeline to receive funding.

Chase is also a big player in the world of business credit cards, offering several different cash back and travel rewards cards.

Pros

• Longer loan terms
• $5,000 loan minimum
• Specialized loans for commercial property purchases

Cons

• Lack of fee and rate transparency
• Must apply at a branch
• Strict eligibility requirements

Bank of America business loans

Bank of America offers more business loan options than Chase, including secured and unsecured term loans and lines of credit, auto loans and healthcare practice loans. You can also get SBA loans with limits up to $5 million. Like Chase, you can choose from SBA 7(a), 504, and Express loans.

The lender also offers equipment financing with rates starting as low as 7.00 percent. The lender’s 0.50 percent origination fee is much lower than many lenders, which may charge anywhere from 2 percent to 4 percent for this fee. For most loans, you will need to apply by phone or in person, although some loans offer an online application.

The bank also offers a variety of business banking services, including checking accounts. That is where Bank of America small business loans really shine. If you bank with the lender, you qualify for the Bank of America Preferred Rewards for Business program. That can land you interest rate discounts and better rewards on business credit cards based on how much you have deposited in eligible accounts.

Pros

• Offers a cash-secured line of credit
• Low interest rates and fees
• Rewards program

Cons

• Strict requirements for some loan types
• Slow application and funding
• Limited eligibility requirements online

How to choose between Chase and Bank of America

Chase and Bank of America both have pros and cons worth considering. Each may be a good fit for many businesses with good-to-excellent credit. Chase works best if you need accessible loan amounts that let you borrow just enough to cover a small purchase, like a small, unexpected equipment repair.

Bank of America is more helpful if you need a variety of loan options to find the best fit for you. And its credit-builder line of credit helps if you can’t qualify for other traditional loans and would like to establish a relationship with this national lender.

Choose Chase for smaller loan amounts

Chase is the better option if you’re in the market for a relatively small loan. Its smallest loan comes in at $5,000. By comparison, Bank of America’s unsecured line of credit starts at $10,000, and its secured line of credit starts at $25,000.

The only Bank of America product that can compete is its cash-secured line of credit. The line of credit has a $1,000 minimum but requires a cash deposit to secure the financing. This makes it useful for building credit but less useful as a way to borrow money.

Choose Bank of America for credit-building

Both Chase and Bank of America tend to prefer larger companies with more revenue and strong credit profiles, which can make them less attractive to new companies or those with poor credit.

But if you can meet the $50,000 annual revenue requirement, Bank of America offers a unique cash-secured line of credit that can help improve your credit score. If you can put up a cash deposit of $1,000, you’ll get a credit line of at least $1,000. That allows you to start building a credit history and improving your score.

Choose Chase for business credit cards

Both Bank of America and Chase offer business credit cards, but Chase has the edge here thanks to its variety of cards and impressive rewards.

Chase business credit cards tend to have valuable sign-up bonuses and generous cash back or travel rewards. These points are tied to Chase’s Ultimate Rewards program, which tends to be one of the best and most flexible credit card rewards programs available.

Choose Bank of America for membership rewards

One great feature Bank of America offers is its Preferred Rewards for Business program. This rewards customers loyal to Bank of America, using the company for their business banking and lending services.

With Preferred Rewards for Business, you’ll get perks like fee waivers, interest rate discounts, and additional rewards on Bank of America business credit cards based on your deposits with Bank of America or Merrill® business investment accounts. You can see big rewards and savings if you can qualify for the highest tiers.

Alternatives

Bank of America and Chase are both strong options if you need business financing, but there are many other options on the market.

If you’re looking for a line of credit, consider Wells Fargo. The lender offers three different unsecured lines of credit, each aimed at businesses of different sizes. Two are unsecured business lines of credit; one is even open to businesses that have been open for less than two years. Another perk is that they come with a rewards program that lets you earn cash back when you draw funds from the line of credit.

SBA loans

SBA loans are special loans that lenders offer in partnership with the U.S. Small Business Administration. The SBA insures loans, reducing the risk lenders take on when offering loans.

Despite that insurance, many major banks, like Chase and Bank of America, still prefer to offer SBA loans to well-established companies with strong credit. They may not even offer certain loan programs, such as microloans, which are designed to help business owners in underserved communities. This includes women, veterans and minority small-business owners who may not qualify for traditional business loans.

Bottom line

Chase and Bank of America are two of the best bank business lenders worth considering. But it’s still a good idea to shop around. The best, most affordable loan for your business may not come from a traditional bank. Online lenders tend to have relaxed eligibility requirements, making them more accessible if you are a startup, have bad credit or can’t meet other eligibility requirements found at banks.

Frequently asked questions

• Do you need a business bank account to get a loan?

  Many banks will require you to have a business bank account before applying for a business loan. Even if a lender doesn’t require you to have an account with them, a business checking account is often required, as many lenders will deny applications if borrowers use personal checking accounts for their deposits.

• Can I get a business loan from a bank with a 580 credit score?

  Yes, getting a business loan from a bank with a 580 credit score may be possible but typically unlikely. Most banks prefer to work with established businesses with credit scores of 670 or higher. Look into online lenders to improve your chances of getting a bad credit business loan. They typically have more favorable eligibility requirements that help business owners with bad credit.

• Are business loans based on personal credit?

  Sometimes, business lenders will look at your business and personal credit scores when you apply for a loan. This is common if you’re running a very new or small company. You may be asked to sign a personal guarantee for the loan, which means you’ll repay the debt from your personal money or assets if the business can’t make the payments.