Small business owners have many financing options, including traditional and alternative lenders. While online lenders provide speed and convenience, some businesses prefer the traditional experience of a brick-and-mortar bank.
KeyBank is one of the largest in the US, providing a robust small business lending program. It is also an SBA-preferred lender.
However, the bank might not be a suitable lender for every small business. It provides very little information on funding times, eligibility, and costs.
We can help you determine if KeyBank is the right choice for your business by covering the benefits, drawbacks, and application process. Specifically, we’ll answer these questions and more:
KeyBank is a traditional banking institution offering consumer and commercial banking services. Its commercial banking products include a suite of small business loans. The bank is also an SBA-preferred lender, but its SBA loans are only available in certain states.
The bank is the primary subsidiary of KeyCorp. The current version of the bank is a result of various bank mergers and consolidations, but its roots date back to 1825.
It is based in Cleveland, OH, and is the only major bank headquartered in the city. It has branch locations in 17 states but maintains a national presence. It was ranked 449th on the 2022 Fortune 500.
The bank offers several small business loans, including SBA loans. Here are the available programs.
Terms loans are the most traditional form of business financing. With a term loan, borrowers receive a large lump sum disbursement for business needs. They then repay the loan, with interest and fees, in fixed monthly payments for the duration of the loan.
KeyBank offers short-term loans, typically with lower qualifications and faster funding but with higher interest rates. As the name suggests, the terms are much shorter, typically 18 months or less.
It also offers traditional term loans, typically longer than two years. More extended repayment periods mean a lower monthly payment, but the total interest paid during the life of the loan is a larger amount.
With a business line of credit, the bank provides an available credit limit. You can draw funds from it as needed and only pay interest on what you draw.
KeyBank’s lines of credit are revolving, which operates like a credit card. As you pay back what you drew, the credit limit replenishes.
The bank offers both secured and unsecured lines of credit. This financing product is excellent for seasonal businesses, ongoing projects, and covering unexpected costs.
A business real estate loan lets you purchase or refinance commercial real estate. Examples include stores, warehouses, factories, and more.
In some ways, a commercial real estate loan is like a residential mortgage. The property you’re financing is the collateral for the loan. The bank holds a lien on the property’s deed until the loan is paid in full. However, there are significant differences too.
The US Small Business Administration (SBA) oversees the SBA program. Business owners cannot apply directly to the SBA. Instead, potential borrowers must apply to an SBA-approved lender. Some lenders, like KeyBank, are SBA-preferred lenders, which means they can process certain aspects of the underwriting process quicker than approved lenders.
The SBA partially guarantees up to 85% of the loans, sets rules lenders must follow, and limits the interest and fees lenders can charge. Many consider SBA loans the “gold standard” of small business financing.
The SBA 7(a) is the program’s most common and versatile loan. You can use the funds for most business purposes. There are also subsets the SBA 7(a) loan, which include:
SBA 504 loans provide funding to purchase commercial real estate or other major fixed assets. These loans require working with a Certified Development Company (CDC), sometimes called SBA 504/CDC loans.
CDCs have specific rules on how the funds can be applied. The loans are typically reserved for projects that will help promote economic activity in the area.
Businesses across nearly every industry require equipment to get the job done. However, most business equipment carries a massive price tag, and few companies have the liquid capital to purchase it outright.
Equipment financing allows you to acquire needed business equipment on credit. In most cases, the lender pays the equipment vendor directly for the equipment. The business repays the loan in fixed payments, and the equipment is the collateral.
KeyBank has provided equipment financing for over 48 years. It maintains relationships with vendors and manufacturers that help support the process.
Unfortunately, the lender provides no information on amounts, rates, or terms. Interested business owners must contact the bank directly to learn more about financing options.
Applicants are required to have at least three years in business. Unfortunately, the bank doesn’t disclose a minimum credit score or revenue requirement. However, your average net income for the previous two years cannot exceed $5 million.
As with all lending, the higher your credit score, the more likely you’ll get approved. You also get lower interest rates and more favorable terms with a higher credit score.
The SBA also sets some specific rules for borrowers. You must meet the following to be eligible:
While the bank’s other lending products are available in all 50 states, it only offers SBA loans in states with branch locations. Its SBA loans are only available in the following states:
You must contact the bank to apply for a loan. It doesn’t provide an online application.
The bank’s website doesn’t provide information on costs or eligibility requirements. It’s primarily meant to provide general information, but you must contact them to learn about applying, rates, etc.
The bank may have a business loan affiliate program, but how it works is unclear. ISOs and loan brokers interested in partnering with the bank should contact them for more information.
You start the application process for non-SBA loans by calling the bank or scheduling an in-branch appointment. To apply for an SBA loan, you must contact one of the bank’s SBA loan offices. It provides a list of offices on its website.
You will most likely need the following documents when you apply:
Most loan payments for traditional lenders like KeyBank are made monthly. SBA loans always carry monthly payments.
The bank offers a variety of traditional small business loans. It is also an SBA-preferred lender.
While it doesn’t publish interest rates, traditional lenders tend to have lower rates. There’s no minimum credit score to apply, although you’ll likely need good credit to get approved.
As a full-service bank, the lender offers business checking accounts and credit cards. It can serve as a one-stop shop for your business banking and financing needs.
The bank doesn’t publish eligibility requirements, interest rates, or fees. In general, the website is clunky and not very informative.
There are no online applications. You must call the bank or schedule an appointment at a branch to apply.
Its SBA loans are only available in 17 states. You must contact an SBA loan office to apply.
Pros:
Cons:
Yes, KeyBank is one of the largest banks in the nation and a legitimate small business lender. It has been Better Business Bureau (BBB) accredited since 1933 and has an A+ rating on the watchdog site.
All KeyBank reviews we could locate were from consumer bankers. We should note that the bank has very low scores from its consumer banking customers.
It has a 1.8 out of 5 on 62 TrustPilot reviews and has 1.1 out of 5 rating on 126 BBB reviews. It has also closed 246 BBB complaints in the last three years.
Since the lender doesn’t publish qualifications, there’s no way to know if you’ll get approved. Generally, traditional bank lenders have stringent requirements. Their underwriting process may reveal issues that trigger a rejection.
If you were declined, the denial letter should explain why. If not, you can contact the bank for more information.
Fortunately, there are many lenders available if KeyBank doesn’t work. You could try another traditional bank lender like Wells Fargo or Truist.
However, if you’re struggling to qualify for business financing from a brick-and-mortar bank, you might want to consider alternative business financing. Online lenders typically offer quick and easy online applications with lower eligibility criteria and fast funding times. The tradeoff is that alternative financing is more expensive, but it could be worth the extra cost if it gets you the funding you need to support and grow your business.
You may be interested in the following small business loan:
KeyBank is best suited for small businesses with at least three years in existence who want a traditional bank lending experience. It’s also an excellent option if you’re in one of the 17 states where the bank services SBA loans.
There’s no timeline for how long it takes to close a loan and receive your funds. So, it’s also a good option if you don’t need urgent funding.
Small business owners who need fast funding, want transparency on costs and qualifications, or prefer the convenience of online applications must find a different lender. Deciding between a traditional or alternative lender comes down to if the convenience, accessibility, and speed of alternative lending are worth the extra costs.
Based on user reviews, products, and available information, we rate KeyBank at 2.9 out of 5. It has a good product offering, but its most advantageous product – SBA loans – is only available in 17 states. The lack of transparency regarding qualifications and costs is also a red flag. It is impossible to determine whether it offers competitive advantages over other banks or alternative lenders.
Disclaimer: The KeyBank trademark is owned by KeyCorp® and its use herein is for reference purposes only and it does not indicate sponsorship or endorsement from KeyCorp®.
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