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American Express is known primarily for its credit cards and travel services, but the company also provides financing options for small businesses in the form of term loans and lines of credit.
With an American Express business loan or line of credit, companies can access funding to help cover operating expenses, expand locations, hire employees, or tackle other business needs.
But how do American Express business loans work, and are they the right financial option for your company?
This comprehensive guide covers everything small business owners need to know about getting financing from American Express. We’ll explore loan types and terms, eligibility requirements, the application process, pros and cons to consider, and alternative lenders to consider if you are denied.
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Types of Business Loans from American Express
American Express offers several types of financing solutions for small and medium-sized businesses:
Term Loans
- Fixed amount loans issued as a lump sum, with fixed regular payments over a set repayment term
- Typically used for larger financing needs like business expansion or equipment purchases
- Terms range from 2 to 5 years
- Requires collateral
Lines of Credit
- Revolving credit lines with flexible draw amounts and payments
- Functions similarly to a credit card, with ability to access funds as needed
- Ideal for working capital and operating expenses
- Typically lower minimum credit lines than term loans
Merchant Financing
- Funding advance based on a portion of future credit card sales
- Payments taken automatically as a percentage of daily card transactions
- No fixed repayment schedule
Each type of financing serves different business purposes. Companies should assess their funding needs, cash flow, growth plans and risk tolerance to determine if a term loan, line of credit or merchant cash advance makes the most strategic sense for their situation.
Eligibility Requirements for American Express Business Loans
To qualify for financing from American Express, businesses must meet certain eligibility standards:
Time in Business
- Typically 2 years minimum time in business required
- Startups and newer companies may not qualify
- Length of time in industry also considered
Annual Revenue
- Minimum of $250,000 in annual revenue is generally required
- Higher minimums may apply for larger loans
- Proof of revenue through financial statements required
Personal Credit Score
- A minimum personal credit score of 700 is recommended
- Score requirements may be higher for larger borrowers or loans
- Personal credit reports will be evaluated
Collateral Requirements
- Collateral not required for lines of credit under $100K
- Loans over $100K typically require collateral
- Business assets like property, equipment, or AR/AP can be used
Industry Restrictions
- High-risk industries like gambling and adult entertainment ineligible
- Must have an eligible NAICS business industry code
Meeting the minimum eligibility criteria is key for approval, but does not guarantee financing. American Express also evaluates the financial health, growth prospects, and management expertise of applicants through the full underwriting process.
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Loan Amounts and Terms from American Express
American Express offers both small and large business loans, with varied terms to meet different funding needs:
Minimum and Maximum Loan Sizes
- Lines of Credit – $5,000 minimum up to $100,000
- Term Loans – $5,000 up to $500,000
- Higher limits available for very established businesses
Repayment Term Lengths
- Lines of Credit – Open-ended credit line
- Term Loans:
- 2 – 5 year repayment terms
- Shorter terms for smaller loans
- Longer terms possible with strong qualifications
Interest Rates and Fees
- Rates from 7.99% – 29.99% APR
- Actual rate offered based on qualifications
- Origination fee of 2.00% – 4.99% may apply
- No prepayment penalties
Grace Periods
- Interest-only initial period offered on term loans
- Allows time for financing to be deployed before principal payments begin
- Grace period duration based on loan purpose and term
Getting pre-qualified can give small business owners an idea of what loan sizes, terms, rates, and payments they may qualify for based on their unique business.
Application Process for American Express Business Loans
The application process for American Express business loan financing involves gathering documents, completing an application, and allowing time for review and decisioning:
Required Documents
- 2 years of business and personal tax returns
- Recent business bank statements
- Business financial statements and/or profit & loss statement
- Ownership documentation like articles of incorporation
- Business licenses, EIN confirmation, and identity documents
- Collateral details and documentation (if applicable)
Application Steps
- Pre-qualification available online
- Submit complete application online or by phone
- Application decision made within 1 week typically
- Loan officer assigned to each application
Decision Timelines
- Pre-qualification results immediately
- Full decision in 36 – 48 hours once complete application submitted
- Timelines may be longer for loans above $250K
Funding Process
- Funds available as soon as 1 day after approval
- Wire transfer or direct deposit of loan proceeds
- Funds use confirmed through banking transaction monitoring
Completing an accurate application with all required materials is key for prompt review and decisioning. Approval timeframes may extend if additional verification or updated documents are needed.
Pros and Cons of American Express Business Loans
There are several potential advantages and drawbacks for small businesses to weigh when considering financing from American Express:
Pros
Brand Reputation
- Long history and recognition of American Express
- Perceived trust and security in the brand
Competitive Rates
- Rates can be lower than some alternative options
- Particularly competitive for more credit-worthy borrowers
Flexible Terms
- Variety of term lengths available
- Lines of credit allow flexible draw amounts
Cons
High Minimum Revenue
- $250K threshold leaves out earlier stage companies
- Requirements stricter than some competing lenders
Large Existing Amex Relationship Required
- Priority given to current American Express customers
- Significant existing processing history generally expected
Limited Industry Options
- Rules out high-risk or socially frowned-upon industries
- Health care, education, retail may have better options
Evaluating loan options in the context of your specific business needs and situation is important. American Express financing presents a solid choice for some established small and mid-sized businesses, while others may benefit from exploring alternative lenders or government-backed SBA loans.
Alternatives to Apply if Denied By American Express
If your business does not meet the requirements for an American Express loan or line of credit, there are several alternative online lenders and financing options to consider:
Online Lenders
SBA Loans
- Government guaranteed small business loans
- Offered through local banks/lenders
- Low rates and long repayment terms
- Extensive paperwork/underwriting
Community Banks and Credit Unions
- More flexible lending decisions
- Focus on relationship-based underwriting
- Lower loan minimums or revenue requirements
- Local decision making and servicing
Peer-to-Peer Lending
- Funding from individual and institutional investors
- Fast decisions and funding times
- Higher costs and rates in many cases
Completing multiple loan applications can allow small business owners to compare rates and terms and choose the best offer for their needs. Be prepared to move quickly on approvals to secure financing.
American Express offers a versatile range of business loan products for established companies with strong financials. By understanding eligibility requirements, evaluating your funding needs, and researching alternative options, businesses can identify the right financing path to facilitate their growth.
This comprehensive guide covers everything small business owners need to make informed financing decisions and strategically invest in the expansion of their company. Check the American Express website for the most up-to-date program information, rates, and to submit a pre-qualification or application.
