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American Express has been around since 1850, and it’s pretty well known by now that they offer killer personal and business credit cards. But did you know that they also offer other business financing options?
American Express recently announced that they will now be offering loans for businesses needing “access to working capital and short-term financing.” American Express has designated these loans to qualified businesses in need of capital for consolidating debt to smooth out cash flow or make necessary purchases to keep up with growing demand.
Business loans from American Express are the latest addition to American Express’ suite of financing optionss. Additional products already offered include:
Merchant Financing, which offers larger loans to American Express card-accepting merchants.
Working Capital Terms, an option for American Express business cardholders needing to pay off their vendor invoices to free up cash to spend on other parts of their business.
Here’s what you should know about their new business loan product and how it compares to other similar offers.
American Express’s New Business Loans
Business loans from American Express fill a gap that their current financing offers don’t cover: small, monthly repayment loans. Loan amounts range from $3,500 to $50,000. Maxing out at 19.97% APR, these loans come at competitive rates to other online term loan providers, and much better rates than other alternative loan types, like business cash advances.
American Express advertises that these loans can be used to fund growth and consolidate debt. Businesses can buy inventory in bulk, purchase equipment, boost marketing spend, and more. Businesses that need to consolidate debt can use this loan to pay down balances on up to four commercial credit cards (American Express cards not included). This could be a good option for lowering expenses on interest payment if you have over $3,500 in business credit card debt ($3,500 is the minimum amount you can request) and your interest payment on an American Express business loan will be less than that of your credit card purchase APR.
Because this loan offer is available to American Express OPEN members, making a decision on your loan application can take as little as one minute and you can get your funds in as little as 24 hours. Applicants must be in good standing on their business credit card payments to qualify for American Express financing.
Is American Express Financing Right For Your Business?
Of course, this new business loan product is not for everyone. Here’s how it stacks up next to other lending products offered by American Express.
| Business Loans From American Express | Merchant Financing from American Express | Working Capital Terms from American Express | |
| Loan Amounts | $3,500 – $50,000 | $5,000 – $2M | $1,000 – $750,000 |
| Repayment | Monthly repayment. Over 1, 2, or 3 years. | Daily repayment. 6, 12, or 24 months. | Repayment by fee percentage of invoice amount. 30, 60, 90 days. |
| Cost | 6.98 – 19.97% APR, varies based on creditworthiness and other factors | Fixed fee, a percentage of the amount borrowed, 3 – 28% based on creditworthiness, length of term, and other factors. | 0.5 – 1.5% fee per invoice, varies based on term of the loan. |
| Best For | Creditworthy American Express business cardholders looking to fund growth, cover short term cash flow needs, or consolidate debt from multiple credit cards. | Established businesses taking on large projects, such as buying new equipment or opening a new location. Rates can be high, but much cheaper than merchant cash advances. | Customers who work with vendors but don’t have flexible trade terms, who want to fund their invoices to free up cash. |
| Requirements to Qualify | Must be American Express business cardholders. Invitation to apply will be sent to eligible card members. | Must be an American Express card-accepting merchant. Must be 2 years in business with $50,000 or more in revenue and $12,000 or more in annual credit and debit sales. | Must be American Express business cardholders. Eligibility based on existing data housed by American express, such as creditworthiness. |
| Time to fund | 3 – 5 business days | As fast as the next business day | Payment sent to vendor within 2 – 4 business days |
| Personal Guarantee Required? | Yes | Yes, for loan amounts less than $35,000. |
This article was originally written on November 9, 2017 and updated on May 2, 2018.
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