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

TD Bank and Bank of America are strong options for borrowers looking to secure funding for numerous business purposes. A Bank of America small business loan is more suitable for established businesses that’d like to choose between secured and unsecured financing, while a TD Bank small business loan may appeal to startups and younger businesses. Understanding the differences between the types of business loans these two banks offer and exploring other alternatives can help you make the best decision for your business.

To help you find the best small business loan that meets your business’s needs, here’s a look at how TD Bank business loans compare with Bank of America business loans

TD Bank vs. Bank of America at a glance

TD Bank and Bank of America can appeal to many types of businesses needing funding. But, depending on the specifics of a business, one lender may be better than the other.

TD Bank has highly flexible loan terms, spanning from one to 25 years, and no time-in-business requirement, which is perfect for startups. But Bank of America offers competitive interest rates and secured and unsecured financing loans. With its secured loans, you risk losing the assets you secured the loan with if you default on the loan, or you can get an unsecured loan that doesn’t use assets to back the loan.

Both lenders offer loan amounts ranging from a few thousand dollars to $5 million, allowing businesses who need it to secure a sizeable loan.

TD Bank business loans

TD Bank provides secured business loans, business lines of credit, commercial mortgages and SBA loans that can be used for working capital, equipment purchases, inventory, payroll and more. While most lenders may only lend to businesses with at least two years in operation, TD Bank does not carry a minimum time in business requirement, making it an option for both startups and established businesses — as long as they are located in the states TD operates.

Loan applications can be completed online for borrowers seeking funding under $250,000. Any application for funding over $250,000 must be completed in person at a TD Bank location. Loan approvals can happen as quickly as one business day, but this isn’t guaranteed. Along with fast approval, some borrowers can also enjoy a discount if they have a TD business bank account and set up auto-pay.

Pros

• Online application
• Fast loan processing
• No minimum time in business requirement

Cons

• Origination fee
• Collateral required for term loans and business lines of credit
• Only available in 15 states and Washington, D.C.

Bank of America business loans

Bank of America offers a range of business loan products, including business lines of credit, equipment loans, commercial real estate loans and SBA loans. Since most loans require a minimum of two years in operation, established businesses may find Bank of America a good fit, especially those who bank with the lender and want to take advantage of its lower rates.

Bank of America does offer a cash-secured line of credit that lowers eligibility requirements. You can qualify with just six months in business and $50,000 in annual revenue. You will need at least a $1,000 security deposit as collateral for the line.

Preferred Rewards for Business members with eligible Bank of America or Merrill business accounts are eligible for various perks, including interest rate discounts and rewards, based on the member’s account balance. Additionally, veterans applying for certain Bank of America business loans can access a 25 percent fee discount.

Pros

• Access to free business credit report
• Competitive interest rates
• Wide range of business financing options

Cons

• Strict eligibility requirements for most loans
• Delayed application processing
• Charges origination fees

How to choose between TD Bank and Bank of America

TD Bank and Bank of America offer a wide range of business banking services, including term loans and business lines of credit.

Both options are suitable for small and mid-sized businesses with good-to-excellent credit. But unlike many bank business lenders, TD Bank doesn’t carry a time-in-business requirement, making it a viable option for newly established businesses. While Bank of America caters to businesses of all sizes, due to Bank of America’s lending requirements, more established businesses will likely have better odds of approval than startups for the lender’s secured and unsecured loans.

Choose TD Bank for startup funding

Startups typically face difficulty securing business funding, especially with banks and more traditional lenders. This is partially because traditional lenders often require businesses to have at least two years in operation.

But TD Bank does not have a minimum time in the business requirement, which makes it accessible to both startups and established businesses. However, collateral is required for both term loans and business lines of credit.

Choose Bank of America for secured and unsecured financing

Bank of America business loans offer a wide range of secured and unsecured financing solutions, including term loans, lines of credit, commercial real estate financing, equipment loans and SBA loans, catering to businesses of different sizes. Since businesses can choose between secured and unsecured business loans, they have more control over their borrowing experience.

Keep in mind BOA’s specific eligibility criteria require a minimum of two years in operation and a minimum personal credit score of 700, so established businesses with or without valuable assets may find it suitable. However, you can qualify for its cash-secured business line of credit with less time in business or annual revenue than its other loans. This can help you get established with the lender to qualify for other financing in the future as your business grows.

Alternatives

While TD Bank and Bank of America offer an attractive range of low-interest business loans, other lenders are worth considering. For startup loans, borrowers may explore online and alternative lenders that cater specifically to younger businesses and subprime or bad credit borrowers.

Credibly has a low minimum time in business requirement of at least six months and works with business owners with credit scores as low as 550. Fora Financial only has a minimum credit score requirement of 500, though you’ll need at least two years in business. Overall, these lenders tend to offer more flexible eligibility requirements, but they can also provide faster loan processing and funding than bank business loans.

Additionally, borrowers can consider financing options other than business loans, such as business credit cards, which can provide quick access to funds for smaller expenses, including inventory and supplies.

SBA loans

Businesses may also want to consider SBA loans, which TD Bank and Bank of America offer.

Other alternatives for funding are SBA microloans or loans from Community Advantage lenders, which are designed to support disadvantaged small businesses and communities. They are funded through nonprofits and mission-based lenders. These loans offer lenient eligibility requirements and affordable, competitive rates, making them a viable alternative for underserved communities that can’t get approved for conventional business loans or through traditional lenders.

Bottom line

TD Bank and Bank of America both offer suitable business loan options for businesses of varying sizes, but you should review your business’s needs and goals to find the best option. Evaluate each lender’s loan type, interest rates, loan amount and fees to determine which aligns best with your goals.

If a bank business loan doesn’t seem like a good fit, there are online and alternative lenders offering loans as well as usiness credit cards, lines of credit and other financing options available. By taking the time to research different loan options, you can find the right loan product for your business.

Frequently asked questions

• How do you get a business loan from Bank of America?

  To get a business loan from Bank of America, first confirm you meet the loan qualifications, which are typically a minimum of two years in business and a personal credit score of 700 or higher. Its cash-secured line of credit does offer lower eligibility requirements: qualify with just six months in business and $50,000 in annual revenue. If your business qualifies, you can complete an application and provide the required documentation.

• How much of a business loan can you get from TD Bank?

  The size of your TD Bank business loan is based on the specific loan product and your qualifications, but TD Bank offers several business loans ranging from $10,000 to $5 million.

• What do most banks require for a business loan?

  The lender and type of loan determine the specific lending requirements. Banks typically require borrowers to have been in business for at least two years, have good or excellent credit and have relatively high annual revenue — often at least $100,000.