In 2000, Chase Manhattan merged with J.P. Morgan and became J.P. Morgan Chase. The company grew further after merging with Bank One Corporation, and then in 2008 Chase acquired the assets of the collapsing Washington Mutual Corporation. Chase Bank is now one of the 10 largest banks in the world, but that hasn’t stopped this business-friendly lender from trying to extend capital to companies of all shapes and sizes.
Chase has been one of the top three suppliers of SBA loans in recent years, while also offering a number of other financing options for various industries. Interest rates at this bank aren’t always the best, but the lending options, terms and loan amounts are pretty hard to beat. Perhaps best of all, this bank can do something that’s almost unheard of among the giant lenders – fund loans quickly.
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Type of Loans Offered
Borrowers can get up to $5 million on the SBA 7(a) loans, but what’s really impressive is that some businesses qualify for as little as $10,000. The down payment for 7(a) loans is typically lower than the other options, which can get as high as 20 percent. Standard terms are up to seven years for working capital, 10 years for equipment funding and 25 for real estate purchases. Fixed and variable interest rates are available, depending on the loan amount and customer credit.
Because 7(a) loans can come in larger sums that take longer to process, Chase also offers SBA Express Term Loans up to $350,000. These are typically issued to companies looking to expand or acquire a smaller business. With a standard SBA loan, up to 75 percent of the amount will be federally backed, while that percentage caps at 50 with the express option. Term limits are the same as the 7(a) loans.
For companies looking to expand through land acquisition or construction, the 504 Loan Program can provide funds with no stated maximum. It’s more difficult to qualify for a 504 loan, but the terms are better and 40 percent or up to $5 million will be funded by the SBA.
Business Term Loans
Standard term loans from Chase will be less competitive than the SBA options but will also come with less spectacular terms. APR might be as high as 10 percent and the down payment is usually around 20 percent. However, loans start at $5,000, an impressively low amount for a large bank to offer. Rates are fixed or adjustable and the terms range from 12 to 84 months.
Business Lines of Credit
Chase offers two lines of credit for small businesses. The more common choice is the regular business line of credit, ranging from $10,000 to $500,000. This credit can be used as an overdraft defense if you have a Chase business checking account, and there is an annual fee of $150 for lines under $50,000 and $250 for lines over $50,000.
The second option is the commercial line of credit, designed for businesses that are transitioning into new industries and potentially dealing with seasonal shortages of cash flow. These credit lines are typically over $500,000 and are revolving, so business owners can keep going back to the well as long as they’re making payments on time. Initial terms are 12 to 24 months and become renewable after the first cycle.
Borrowers who need to supply their companies with large machinery can get up to 100 percent financing from Chase, plus up to 10 percent in soft costs to cover things like installation, sales tax, etc. With full financing, this a great way for business owners to preserve working capital while receiving equipment leasing for up to seven years or 75 percent of the estimated life of the apparatus.
Other Services Offered
As one of the nation’s leading banks and lenders, Chase provides dozens of additional services related to both personal and business banking. The Chase Ink Plus Business Card is one of the better business rewards cards on the market, though the interest rate is variable and ranges from 15.49 to 19.49 percent. The card will cost you $95 a year but has no foreign transaction fees and earns up to 5X points on select purchases.
The bank also offers trade financing to help companies understand how they can best operate in the global market. Chase trade representatives can help business owners to collect and transfer funds without getting caught up in the red tape of international commerce.
In 2010, Joel and Leticia Pollock moved to Miami to start a coffee shop. With good coffee and a good location, their business started to thrive almost too quickly. As they opened a second store and started receiving more orders for wholesale beans than they were prepared to handle, they turned to Chase for financing, support and guidance. The funding Chase provided allowed them to grow the company without turning to equity investors, meaning that Panther Coffee was able to keep its roots while expanding. The business continues to increase its presence, now up to five locations, and the help of Chase Bank has been instrumental in that growth.
One of the best things about alternative lending is that it provides a way for entrepreneurs to seek funding without dealing with the excessive paperwork and wait times put in place by the big banks. In many ways, Chase Bank is forcing people to rethink that outlook, as the company is absolutely massive and yet still provides a variety of lending options with reasonably quick turnaround and solid customer support.
The main knock on Chase’s business lending is that the interest rates are higher than some of the other banks, and that is likely the result of the increased funding options. In any case, businesses of all sizes should consider researching the lending choices that Chase has to offer. There is something for virtually everyone, in pretty much every corner of the globe.