Money & Finance › Banks & credit › Commercial banks: taking deposits, making loans
Business loans: credit lines, C&I term loans, equipment and ABL
· Asset or instrument
Fact, law or dataA rule, statute, definition or measured number.
Bank loans to operating businesses rather than against buildings: revolving credit lines, term loans, equipment loans and asset-based lending.
See it on the Money & Finance map →How it works
US banks held about $2.7 trillion of these commercial and industrial (C&I) loans in late 2025. A revolving line lets a firm borrow, repay and reborrow up to a limit, usually renewed yearly. Term loans run 3–7 years; equipment loans are secured by the machine, financing 80–100% of its cost. Asset-based loans advance about 80–85% of eligible receivables and roughly half of inventory. Most float at prime or SOFR plus 2–4 points, with a blanket lien on business assets and covenants.
Why it matters
They fund payroll, inventory and equipment. For a property owner, a credit line can bridge tenant improvements or a tax bill, but a yearly renewal means the bank can shrink or pull it.
Facts, rules and data
The Fed's weekly H.8 release tracks C&I balances; its Senior Loan Officer Opinion Survey shows whether banks are tightening; UCC-1 lien filings are public records at state offices.
Debates and risks
How much small-business lending is shifting from banks to private credit and online lenders, which report far less data, is hard to measure.
Inside this (1)
Connections (5)
▸Business loans: credit lines, C&I term loans, equipment and ABL are a core product of Commercial banks: taking deposits, making loansFact, law or data
The connection
Commercial banks make most business loans because they pair them with the borrower's deposit and cash-management accounts. The deposits help fund the loans and show the bank the firm's cash flow. Many banks require the operating account as a loan condition, so switching lenders often means moving the whole banking relationship.
When and why
US banks of all sizes; business lending has been a core bank activity for well over a century.
How we know
Fed H.8 data on bank C&I balances and FDIC call reports show the loans and deposits side by side.
Debates and risks
How much ground banks will lose to private credit and fintech lenders, which compete on speed but hold no deposits.
▸Business loans: credit lines, C&I term loans, equipment and ABL usually require, for small firms, Personal guarantees: full, limited and burn-offFact, law or data
The connection
Small companies have thin balance sheets, so banks usually ask owners of 20% or more to sign personal guarantees, often unlimited and joint and several. If the business cannot pay, the bank can pursue the owner's savings, home equity and other assets. Larger firms with audited statements and strong cash flow can often negotiate limited guarantees or none.
When and why
Standard in US small-business lending; SBA rules require guarantees from every owner of 20% or more.
How we know
Standard bank loan forms and the Fed's Small Business Credit Survey show guarantees are routine for small firms.
Debates and risks
How much guarantees actually recover after defaults, since owners often lack liquid assets and settlements are private.
▸Business loans: credit lines, C&I term loans, equipment and ABL usually float over prime or SOFR: the benchmark rate that replaced LIBORFact, law or data
The connection
Most business lines and term loans float. Smaller loans usually key off prime, which banks set 3 points above the top of the Fed's target range; larger ones use Term SOFR plus a spread. Either way, a Fed hike raises the payment at the next reset, often within a month. Borrowers can fix the rate with a swap.
When and why
US banks since LIBOR ended in June 2023; prime has been the small-business benchmark for decades.
How we know
Loan agreements name the index; the New York Fed publishes SOFR daily, and the Wall Street Journal's survey of big banks publishes prime.
Debates and risks
Whether SOFR, which has no bank-credit component, needs an added spread when banks' own funding costs jump in a crisis.
▸SBA 7(a) loans: the all-purpose small-business loan (to $5 million) are a government-guaranteed kind of Business loans: credit lines, C&I term loans, equipment and ABLFact, law or data
The connection
An SBA 7(a) loan is a bank business loan with a federal guarantee: the SBA covers 85% of loans up to $150,000 and 75% above that, up to $5 million. The guarantee lets banks lend with less collateral and longer terms, up to 25 years for real estate, in exchange for fees, rate caps and owners' personal guarantees.
When and why
Since the Small Business Act of 1953; thousands of US banks and some licensed nonbank lenders make them.
How we know
SBA program rules (its SOP 50 10 lending manual) and lending statistics published each fiscal year.
Debates and risks
Whether the guarantee mainly creates loans that would not happen otherwise, or subsidizes loans banks would make anyway.
▸Factoring and forfaiting: selling receivables for cash now is a receivables-based alternative to Business loans: credit lines, C&I term loans, equipment and ABLFact, law or data
The connection
A bank line or asset-based loan lends against receivables: the business borrows about 80–85% of eligible invoices and stays both owner and debtor. Factoring sells the invoices outright, so approval rests on the customers' credit, not the seller's. That suits young or thinly capitalized firms, but at an annualized cost often far above a bank line's.
When and why
Across US small and midsize businesses, especially trucking, apparel, staffing and manufacturing; banks and finance companies offer asset-based loans, specialist firms offer factoring.
How we know
UCC Article 9 covers both sales and pledges of receivables, with filings in state records; lender materials and FCI data show the two compete for the same borrowers.
Debates and risks
When a 'sale' of invoices is really a disguised loan is often disputed, a question courts face in bankruptcies and in usury and licensing cases.