Since opening their doors in 1874 as a frontier bank backed by gold reserves, Bank of the West has grown into a large, regional institution that operates 600 branches in 19 states across the West Coast and the Midwest. This subsidiary of French Bank BNP Paribas, headquartered in San Francisco, provides both consumers and small business owners with an array of credit products, banking services, and wealth management services. But as a business owner, you’re likely most curious about Bank of the West business loans.
In fact, Bank of the West boasts an impressive array of loans for small business owners. In addition to conventional, all-purpose term loans and lines of credit, the bank also offers business loans designed especially for agribusinesses, construction projects, four equipment lease options, and more.
There’s a lot of ground to cover on Bank of the West small business loans. Here, we’ll give you the most pertinent details about each of the bank’s multifaceted loan types, including which projects each are best suited for; and if you think that a bank loan isn’t a viable option for you, we’ll also show you a few of your alternative options, as well.
An Overview of Bank of the West Business Loans
Business Lines of Credit
Business lines of credit are among the most flexible forms of financing available to business owners. Where lump-sum term loans are best used for pre-planned projects, you can think of your business line of credit as a reserve fund that you can dip into whenever you want or need (much like a business credit card, without the plastic or the perks). For instance, Bank of the West suggests using a line of credit to manage your cash flow, purchase inventory, or to finance accounts receivable, but you can use your line of credit for almost any conceivable business-related expense, including unforeseen obstacles (a burst pipe) and unexpected opportunities (a surge of new orders to fulfill).
Here’s how it works: Based on the information presented in your business loan application and your credit score, the bank will allow you access up to a certain amount of money. Your line of credit sits in your business bank account until you decide when, and how much, cash you want to pull, and you’re only responsible for paying interest on the funds you use. After you’ve repaid that amount, your line of credit will restore to its original amount.
Bank of the West offers three types of lines of credit:
- Business Line of Credit: Bank of the West offers standard business lines of credit, with amounts ranging between $26,000 and $750,000. Interest rates are variable, based on the Prime Rate.
- Business Overdraft Protection: Business clients can access funds to cover automatic checks and debits if their Bank of the West checking accounts are running low. These line amounts are lower than the bank’s standard line of credit—between $5,000 and $25,000—but they also carry a variable interest rate. Keep in mind that these lines are directly linked to clients’ Bank of the West business checking accounts, so you’ll need to have a checking account with the bank (or open one) to be eligible for this product.
- Home Equity Line for Business: This Bank of the West line of credit leverages the equity of your home to borrow money, which you’ll then use for business purposes. Home Equity Line amounts are between $26,000 and $750,000, with terms up to 10 years and a variable interest rate.
Business Loans
Bank of the West also offers a few variations on a traditional term loan—which, as a reminder, is a lump sum deposited into your bank account, and which you repay, plus interest, over a predetermined period of time. Term loans are the best financing option if you have to finance a specific, major project with a predictable expense—think purchasing equipment, refinancing debt, or renovating or opening a new facility.
Here’s an overview of Bank of the West’s three types of all-purpose business term loans:
Business and Equipment Loans
Bank of the West can offer business owners term loans between $10,000 and $750,000 to fund business-related projects and equipment purchases. Terms last up to seven years, and clients can choose between a fixed and variable interest rate. These loans are secured with collateral or business assets.
Flex Line Term Loan
Bank of the West’s unique Flex Line Term Loan is a hybrid between a line of credit and a term loan. For the first 12 months of your Flex Line Term Loan, you’ll have access to a non-revolving line of credit—meaning that after you draw funds, your line of credit won’t restore to its original amount, as it would for a revolving line of credit. Over this time, you’ll make interest-only payments on the funds you pull.
Then, when your line of credit reaches maturity, your balance will convert to a conventional term loan structure. Your remaining repayment term may last up to five years, over which time you’ll make both principal and interest payments. You can choose between a fixed or variable interest rate.
Practice Finance Term Loan
As you can tell from the name, this Bank of the West small business loan is a conventional term loan designed specifically for practice owners. With this loan, business owners can buy into an existing practice, become a partner, expand or open new practice locations, refinance existing debt on their practices, or purchase equipment for their practices. Loan amounts can reach up to $1 million, with repayment terms of up to 10 years at a fixed interest rate.
Equipment Leasing
If you’re looking particularly to access the expensive equipment you need to run your business, then an equipment lease from Bank of the West may be the right solution for you. Keep in mind that an equipment lease is not the same as an equipment loan. Where an equipment loan is similar to a traditional loan—in which you’re loaned the cash you need to purchase a piece of equipment—an equipment lease is similar to a rental, in which you pay a lessee for the use of the equipment that they own.
Bank of the West offers four equipment leasing programs:
$1 Buyout Lease
Bank of the West’s $1 Buyout Lease may be the best option for business owners who need to keep their upfront costs low (i.e. skip out on a hefty down payment), as Bank of the West may be able to offer 100% financing for your equipment through this program. The costs of shipping, installation, and sales tax may all be covered with that loan.
You’ll make fixed payments at a fixed interest rate, on either a monthly or quarterly basis; and at the end of your lease, you’ll have the option of purchasing the equipment for just $1.
PRO Lease
Like Bank of the West’s $1 Buyout Lease, their PRO Lease program is a fixed-rate, fixed-term option that may offer up to 100% financing for your equipment, which you’ll repay through either monthly or quarterly repayments.
In this scenario, however, the bank retains the title to the equipment you’re leasing, and so receives the equipment’s depreciation expense. Additionally, lease payments are dependent upon the equipment’s residual value, which is its expected value at the end of its life. As a result of these two determining factors, your lease payments are lower than other loan types, which will ease the burden on your monthly (or quarterly) cash flow.
At the end of your lease, you can choose whether or not to purchase the equipment from Bank of the West. If you decide to purchase your equipment, you’ll pay either its residual value or its Fair Market Value from the beginning of your lease, whichever is the greater amount. If you choose to continue leasing your equipment rather than buying it, your lease will extend for another year, though at a lower monthly payment rate.
TRAC Lease
This leasing option is structured similarly to the PRO Lease program, as Bank of the West retains ownership of your equipment and receives the same tax entitlements (which results in lower payments for you). You can also receive 100% financing for your equipment, as well as fixed monthly or quarterly payments at a fixed interest rate. This leasing plan, however, is specifically designed to help business owners access heavy machinery and vehicles like trucks, trailers, buses, or forklifts.
You can choose to purchase the equipment at the end of your remittance schedule, too, at a price that you and the bank agreed upon at the beginning of your lease. If you choose not to purchase the equipment, then the bank will sell the equipment. If the sale price are higher than the agreed-upon purchase price, then the bank will return to you any proceeds in excess of that amount, minus the costs the bank incurred in the sales process; and if the sale price is lower than the original amount, then you’ll reimburse the bank for the difference.
Lease Line
Like a line of credit, Bank of the West’s Lease Line allows clients access to a predetermined amount of funds, which they can then use specifically to finance an equipment lease—even several at a time, if your line amount can allow for it.
Also like a line of credit, you won’t need to pay off your line of credit until you dip into your funds—or, in this case, until your equipment lease is funded—and you’ll only need to pay interest on the amount of the equipment you’re funding, even if it’s less than the total amount of your line. Payments will remain fixed over your lease term.
Agriculture Financing
Farmers and other agricultural business owners may have trouble seeking financing tailored precisely to their needs, offered by reputable, trustworthy lenders. Luckily, Bank of the West offers four types of loans for agriculture businesses, which are designed to finance particular farming-related projects (and you can’t get much more reputable than a large, regional bank):
Operating Line
Bank of the West’s Operating Line works just like a line of credit, but this product is available to help farming and agriculture business owners cover a range of short-term costs, whether purchasing feed or covering basic operational expenses. These line amounts range from $26,000 and $5 million.
Farm Flex Loan
Like their Flex Line Term Loan, Bank of the West’s Farm Flex Loan is a non-revolving line of credit with a 12-month draw period, which then converts into a fully amortized term loan. In this scenario, however, terms can reach up to six years. Loan amounts range between $10,000 (or $10,100 in Arizona) and $500,000.
Term Chattel Loan
This option is intended to meet farmers’ long-term financing needs, whether it’s breeding livestock, purchasing farm assets, or simply for all-purpose, long-term working capital. The Term Chattel Loan is structured as a conventional term loan, on which you’ll make both principal and interest repayments over a predetermined period. Loan amounts range between $10,000 and $500,000+, with either a fixed or variable interest rate.
Farm Real Estate Loan
Bank of the West’s Farm Real Estate Loan is intended to help agribusinesses purchase land to expand their operations, or to open a new facility. These long-term loans can be repaid on either an annual or semi-annual basis, depending on your cash flow, at either a fixed or variable interest rate. Loan amounts range from $10,000 to $5 million.
Construction Loans
If you need to purchase, develop, renovate, or build commercial real estate, you may consider one of Bank of the West’s three construction loan options, all of which are suited for different construction projects:
- Commercial Real Estate Construction Loans: This loan finances the construction of various commercial projects, such as stores, offices, industrial and manufacturing plants, and apartment buildings.
- Land Acquisition and Development Loans: This loan helps business owners purchase land for commercial structures, and then to build those structures.
- Builder Financing: Finally this loan finances the construction of pre-sold, built-on-spec homes, condos, subdivisions, and other developments.
SBA Loans
As one of the SBA’s 100 most active lenders, Bank of the West approved 436 borrowers for SBA loans last year, funding a total of $269,232,100 in these highly coveted business loans.
There are so many advantages to securing an SBA loan, including higher loan amounts, longer repayment periods, lower down payments, and lower interest rates than conventional bank loans. And because the government guarantees up to 85% of the loan amount, these loans are generally less risky for banks—which means they may approve business owners who couldn’t be approved for bank loans, such as young businesses and business owners with challenged credit.
Plus, as a Preferred Lender, Bank of the West can process SBA loans in-house, rather than sending applications to the SBA for a final credit decision, which considerably expedites the application process.
While the SBA offers several loan programs, Bank of the West is a participating lender in two of their most popular programs: the SBA 7(a) loan, and the SBA 504 loan.
SBA 7(a) Loan
One of the most flexible SBA loans, SBA 7(a) loan funds can be used for any number of business-related, lender-approved projects—think purchasing, refinancing, or building real estate; purchasing equipment; acquiring a business; or as general working capital.
SBA 7(a) loan amounts range from $50,000 to $5 million. Repayment terms vary depending on the use of your proceeds, but generally, they can reach up to seven years for working capital and up to 25 years for real estate-related projects.
SBA 504 Loan
Where SBA 7(a) loans can be used for nearly any business-related purpose (as long as it’s approved by the SBA), SBA 504 loans are only meant to provide long-term financing for major fixed assets and real estate. As such, SBA 504 loan repayment terms and loan amounts exceed those of other SBA loan programs. Depending on your intended use of proceeds and eligibility, you may receive between $250,000 and $25 million by participating in this loan program, with repayment terms between 10 and 25 years.
Are Bank of the West Business Loans Right for You?
Thanks to their wide variety of loans, any one of the above Bank of the West business loans would be an excellent option for most business owners. But in order to secure a bank loan, you need to meet the bank’s strict eligibility standards.
Although Bank of the West doesn’t disclose specific qualifications you need to meet for loan approval, generally banks are only willing to work with business owners who pose the least risk of default. It follows, then, that banks approve business owners with excellent credit scores, years of experience in their industry, strong revenue, and, overall, who demonstrate the capacity to handle and repay additional debt—which are standards that the majority of small business owners can’t fulfill.
So if you’re not yet eligible for Bank of the West business loans, consider working with an online lender instead, which typically have much less difficult eligibility standards than banks’. Since these platforms are tech-forward, too, the application process and credit decision tend to be fully automated, streamlined, and fast—once you apply, you’ll typically get a decision within minutes—which makes online loans an excellent option for business owners who need access to cash ASAP.
These days, there are tons of reputable, trustworthy alternative lenders on the market. Here are just a few of your options:
- Lending Club: Term loans from Lending Club carry repayment periods between one and five years, loan amounts between $5,000 and $300,000. Interest rates are fixed, and generally range between 5.9% and 25.9%.
- Fundation: Fundation is another great option if you’re seeking a conventional term loan, similar in structure to what you’d find from a bank. Fundation’s term loan amounts are a bit higher than Lending Club’s, with a range between $20,000 and $500,000. Terms last between one and four years, and interest rates typically range between 7.9% and 28.9%.
- Kabbage: Kabbage offers short-term lines of credit with either a six- or 12-month term, with loan amounts ranging between $2,000 and $250,000. Depending on the length of your term, interest rates start between 1.5% and 10% for the first few months of your loan, then drop to 1% for the remainder of the term.
Remember, too, that you can always work with a loan specialist if you need help finding, comparing, and applying for affordable and accessible loan options—whether those options are from a bank or from an alternative lender.
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from Fundera Ledger https://www.fundera.com/blog/bank-of-the-west-business-loans/
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