Finding the right loan for your business can be challenging, with a bevy of financing options and providers, from online banks to microlenders. However, if you’ve been in business for at least one or two years and have a steady stream of revenue, you may find the most favorable interest rates and terms through traditional bank loans.
In order to find the best banks for small business loans, AdvisorSmith examined over 25 different lenders, weighing a number of factors, including financial strength ratings, customer satisfaction data, complaint ratings from the Better Business Bureau, available terms and loan amounts, and availability of information and ease of use of the lender websites.
The Best Banks for Small Business Loans
- U.S. Bank: Best overall
- Huntington National: Best for SBA loans
- Chase: Best for startups
- PNC: Best for customer service
- Bank of America: Best for ease of use
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U.S. Bank: Best overall
U.S. Bank is one of the largest commercial banks in the nation, with over 2,000 branches in 26 states. Consistently rated high in financial strength, U.S. Bank has received some of the highest long- and short-term issuer default ratings in the world from Fitch (AA-/F1+), S&P (A+/A-1), and Moody’s (A2). In addition to high customer satisfaction ratings, U.S. Bank has been consistently recognized as one of the world’s most ethical companies.
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We chose U.S. Bank as our best overall because of its strong focus on small business owners, robust financial standing, and extensive product portfolio with options for both large and small businesses. U.S. Bank offers relatively low interest rates and few additional fees. We only wish it had more of a national presence as its branches are in just 26 states.
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Huntington National: Best for SBA loans
Huntington National Bank is the second-largest SBA lender in the nation. Based in Columbus, Ohio, Huntington operates over 1,200 branches in 12 states, primarily in the Midwest. Huntington National Bank has received high long- and short-term issuer default ratings from Fitch (A/F1), Moody’s (A1/P-1), and DBRS (A/R-1), indicating strong fundamentals. The company has also been rated extremely high in both customer satisfaction and mobile app satisfaction by J.D. Power.
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We chose Huntington National Bank as our best bank for SBA loans because of its great reputation and customer satisfaction ratings, extensive SBA loan experience, and strong financials. While Huntington National has a presence in only 12 states, its strong customer experience and financial standing pushed it to the number one spot in our analysis. If your area is not served by Huntington, we also recommend Live Oak Bank, which has a completely digital presence and serves all states.
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Chase: Best for startups
Chase Bank is the largest commercial bank in the nation, with over 4,700 branches across 48 states. Considered one of the strongest banks in the world, Chase has received some of the highest long- and short-term issuer default ratings from Fitch (AA-/F1+), Moody’s (Aa2/P-1), and S&P (A+/A-1). Chase also has a strong reputation with small businesses, with a variety of popular commercial products and services, including business credit cards.
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We chose Chase Bank as our best bank for startups because of its financial strength, wide availability, and extensive product portfolio that caters to businesses both small and large. With a variety of products suited for startups, from term loans that start at $5,000 to an array of popular business credit cards, Chase Bank is a great option for businesses just starting out and looking to grow.
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PNC: Best for customer service
PNC Bank is the fifth-largest commercial bank in the country, with approximately 2,300 branches serving primarily the eastern half of the U.S. With strong financial ratings from Fitch (A+/F1), Moody’s (A2/P-1), and S&P (A/A-1), PNC Bank is a strong commercial lender with a variety of financing products for small businesses, including credit cards and SBA loans.
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We chose PNC Bank as our best bank for customer service because of its consistently high ratings in customer experience, robust financial ratings, and strong product offering. While PNC doesn’t have nationwide branch coverage, its business service phone line is available to customers (separate from its consumer customer service line), and the bank has a strong online presence.
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Bank of America: Best for ease of use
Bank of America is one of the largest commercial lenders in the nation, with roughly 4,300 branches and a presence in all 50 states. With strong financial ratings from Fitch (AA/F1+), Moody’s (Aa2/P-1), and S&P (A+/A-1), Bank of America has a well-regarded reputation with small businesses and is also a preferred SBA lender.
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We chose Bank of America as our best bank for ease of use because of its highly rated digital presence and mobile app, strong financial standing, and nationwide coverage. As one of the Big Four banks and a popular consumer banking choice, Bank of America has been able to create digital experiences that are easy to use for its customers, and the bank is widely recognized as a leader in the financial app space.
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Types of Small Business Loans
Banks offer a variety of commercial loan types, and the best loan for your business will depend on your goals for the loan, the type of business you run, your financial situation, and more. It’s best to make sure you understand what type of loan products are available and how a lender can fulfill your financing needs.
Below, we’ve listed some of the most common types of small business loans:
| Loan Type | Best For |
|---|---|
| Term loan | Qualified businesses looking for short or long-term financing needs and predictable repayment schedules |
| Business line of credit | Businesses that need flexible access to working capital |
| SBA loan | Small businesses that have trouble getting approved for more traditional loans but are otherwise qualified |
| Equipment financing | Businesses looking to finance the purchase of new equipment |
| Microloan | Startups and newer businesses looking for small amounts of capital (less than $50,000) |
| Invoice financing | Businesses that regularly invoice clients and have capital locked up in large outstanding invoices |
| Merchant cash advance | Seasonal businesses that take card transactions and need quick access to cash |
| Commercial real estate loan | Businesses looking to expand, renovate, or purchase commercial property |
| Personal business loan | New business owners with good personal credit looking for small amounts of funding |
| Business acquisition loan | Business owners looking to purchase an existing business, buy a franchise, or buy out a business partner |
Business Loan Requirements
Depending on the type of loan you’re applying for and the lender you’re applying with, there are different requirements you must fulfill in order to be approved. Traditional bank loans and loans guaranteed by the SBA generally have strict requirements. Banks will usually be looking for your business to have operated for a minimum number of years, have a stable stream of revenue, and for you to have a minimum credit score.
Below, we’ve listed some common business loan types along with their major requirements.
| Loan | Key Requirements |
|---|---|
| SBA loan | Business plan, financial history, personal credit score, business credit score |
| Traditional term loan | Personal credit score, business credit score, in business for at least two years, collateral |
| Online term loan | Revenue, in business for at least one year, credit score |
| Business line of credit | Business credit score, personal credit score, revenue |
| Startup loan | Business plan, personal credit score |
| Equipment financing | Equipment as collateral, personal credit score, in business for at least one year |
| Invoice financing | Financial strength and payment history of customers, credit score, in business for at least one year |
| Merchant cash advance | Annual sales of at least $50,000, two years of credit card sales history |
| Personal business loan | Personal credit score and personal financial history |
| Microloan | Business plan, personal credit score, business credit score |
| Commercial real estate loan | Net operating income, personal credit score, business credit score, in business for at least one to two years, financial history |
Business Loan Interest Rates
When evaluating business loans, interest rates will play a big part in your decision process. Ultimately, the interest rate on a loan will be the bulk of the cost to the loan, in addition to various fees that lenders charge. Interest rates can vary by type of loan and by lender, and depending on the financial standing of your business and your personal credit score, you may be offered varying rates.
| Type of Lender | Average Interest Rates |
|---|---|
| Banks or Credit Unions | 1.7% to 5.4% |
| Alternative or Online Lenders | 4.8% to 30.1% |
It’s important to understand how interest rates work, and how you can make an apples-to-apples comparison between lenders as you are shopping for a business loan. Take a look at our guide on business loan interest rates, and learn about the types of interest rates you’ll see, common fees that lenders charge, and the different factors that affect interest rates.
How to Get a Small Business Loan
There can be a lot involved in securing a small business loan, and you’ll want to make sure you’re doing your due diligence to get a loan that fits your business’s needs. A little bit of upfront work can help you avoid potential headaches in the future, not to mention save you money in interest rates and fees. Follow our basic seven-step guide to learn how you can get the right loan for your business.
- Determine your goals for the loan.
- Explore the different types of business loans available.
- Compare small business lenders.
- Understand the requirements to qualify for a business loan.
- Calculate the cost of a loan and determine affordability.
- Gather documentation.
- Apply.
Methodology
In order to determine the best banks for small business loans, AdvisorSmith considered a number of factors that reflect a lender’s financial strength, customer satisfaction, and ease of use. Using our own proprietary scoring algorithm, we weighted the various factors based upon what we believe to be important for small and midsize business owners. These factors included ratings, reviews, and complaint data from the Better Business Bureau, Trustpilot, and other online review platforms; an evaluation of each lender’s financial solvency; a deep dive into lender products, options, application processes, and website features; and more. While we considered a number of lenders, we only included in this article the top choice in each category.
The AdvisorSmith rankings are based upon our editorial team’s quantitative and qualitative analysis, and they are intended to serve only as a guide for our readers. We encourage our readers to conduct their own research when selecting a lender, shop and compare quotes, and make a decision based on their own unique business needs.
AdvisorSmith is in no way compensated for any of our reviews.
Final Word
Choosing a lender is an important step in your business’s financing journey. By taking out a commercial loan with a bank, you are entering into a relationship that has a significant impact on your business’s finances and may last for years. Make sure you are doing your research to understand a bank’s financial strength, customer experience, product offerings, pricing, and more. It’s in your best interest to compare banks and their offerings, and then make an informed decision about what best suits your unique business’s needs.
