Loan program offers entrepreneurs up to $100,000

It’s not quite a return to small-town banking, where personal relationships determined loan approvals, but Bank of America is taking a more intimate look at its small business clients with a new program that promises access to an unsecured, up-to-$100,000 line of credit.
The product came after a one-year study in which the bank’s small business customers expressed frustration in three areas: access to capital, time management and payroll administration, said Mario Ruggiero, senior vice president and Northeast business development leader for Bank of America.

The unsecured credit line, called “Business Credit Express,” was developed in response to clients’ feedback, Ruggiero said. Most banks don’t lend to small businesses until they have been in operation for at least 60 days. With Business Credit Express, bank clients can gain access to capital after being in business as little as one day.

The idea is to “give more access to capital quicker,” Ruggiero said.

Customers can apply for the line of credit without filling out lengthy applications. Rather, a meeting with one of Bank of America’s small business bankers will take care of the application process. Approval is instant in some cases.

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When asked if it’s risky to offer small businesses an unsecured line of credit after a single day of operation, Ruggiero said “we took a different approach to it.” Instead of looking at the past history of the business – since there is none – or at cash or collateral, the bank looks at the business owners’ personal credit scores, “how they handle bills personally.”

Ruggiero said the line of credit comes with a Business Credit Express Visa card, which adds to the convenience of the product. It allows customers to access the line of credit anytime. Customers can borrow and repay as often as they want.

In addition, Bank of America doesn’t charge a cash advance fee, whether a customer uses the Business Credit Express Visa card at an ATM, makes a purchase, uses an Express check or transfers funds online.

Business Credit Express is part of a larger package of products, called “Business 24/7,” that also includes a business checking account, an online payroll service, an online business suite for managing invoices and small-business health insurance.

“We want them to grow with the bank,” Ruggiero said.

With online payroll, he said, Bank of America will make all of the tax and health insurance deductions for up to 20 employees for free, if the employer pays by direct deposit and the employees have Bank of America checking accounts.

To access the system, he said, business owners set up a secure online payroll account. On pay day, they enter the hours for each employee, if employees are paid hourly, and then click on “create paychecks.” If employees are salaried, the system remembers the rate of pay and calculates their paychecks accordingly.

“Certainly we see it as a great growth opportunity,” Ruggiero said of the small-business banking products. “It is the fastest-growing sector of our company.”

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