American Express Small Business Loans Detailed Review

American Express offers small business loans as you probably already know, offering working capital to small business owners who need more funds than what they can get from their business credit cards, competing with some of the best banks for business loans.

There are a lot of advantages associated with American Express’s loan offerings, which we will mention in this article. To see if any of those is a good fit for your business, read on.

What is American Express Merchant Financing?

While American Express small business loans fall under a category known as American Express Merchant Financing, they are not merchant cash advances.

With a merchant cash advance, you receive lump sum funding in exchange for a percentage of your future credit card sales. The American Express Merchant Financing program is different as it offers unsecured business loans. These include short-term loans and settlement advance loans.

How Does American Express Merchant Financing Work?

When you hear “merchant financing,” the first type of financing that pops into your head is likely a merchant cash advance.

While the concept is similar, this American Express business loan isn’t actually a merchant cash advance—it’s fully a commercial loan.

How do these options differ? Merchant cash advances aren’t technically “business loans.” Instead, with this type of financing, merchant cash advance companies (not lenders) are purchasing or discounting the value of your credit and debit card sales.

You pay the merchant cash advance company back by letting them take a fixed percentage from your daily credit and debit card sales.

Again, American Express Merchant Financing is set up differently than a merchant cash advance. With the Merchant Financing program, American Express provides qualified merchants (more on what counts as “qualified” later) with unsecured business loans.

There are two types of American Express small business loans under their Merchant Financing program: short-term loans and settlement advance loans (which is no different than any type of “advance funding”).

The value of any type of American Express business loan, though, is mostly based on your historical credit card and debit card receivables each month. While American Express isn’t purchasing your credit and debit card receivables, they will pull repayment for the loan from them.

American Express Loan Terms and Amounts

If you opt for American Express Merchant Financing, you can choose from a one or two-year loan term.

The one-year loan comes with a loan amount that ranges from $5,000 to $2 million and is based on how much your business earns through credit card and debit card purchases. The two-year loan terms start at $36,000 and go all the way up to $2 million.

No matter which term you choose, you’ll receive the funds up front in one lump sum. It’s important to note that if you’d like a revolving line of credit, you’ll need to seek another financial provider as American Express business lines of credit aren’t currently available.

American Express Loan Fees

You may be surprised to learn that there are no interest rates with American Express small business loans. Instead of paying interest, you’ll pay a fixed fee when you take out the loan. The fee may be between 6% and 14% with the one-year term loan.

For the two-year loan term, it can range from 12% to 14%. Before you sign on the dotted line, it’s a good idea to do the math and figure out the total cost of the loan with the fee. Like with any financial product, reading the terms of service is key before securing an American Express business loan.

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How to Repay American Express Small Business Loans

In order to repay your American Express small business loan, you’ll use your business’s credit and debit card receivables.

To do so, American Express may set up a lockbox so that all of your card transactions get deposited into a special bank account. The card issuer will then deduct a certain percentage of your profits on a daily basis.

Your payment processor may also help you repay your loan. They can deduct a percentage of each transaction and send it to American Express. After they do, they’ll distribute the remainder of your profits to your business bank account. If your business loan exceeds $35,000, American Express may deduct a percentage of all of your American Express transactions.

Last but not least, they may withdraw a fixed amount from your account daily through ACH. This repayment method, however, is only available if you go with a one-year loan that’s less than $150,000.

American Express Working Capital Loans

If you need some cash to cover your day-to-day expenses, rather than long-term business assets, an American Express working capital loan can help.

With an American Express working capital loan, you’ll select a vendor. Then, you’ll repay American Express based on the terms in your contract. You won’t receive the funds because American Express will pay your vendor directly.

American Express working capital loans range from $1,000 to $750,000 and terms of 30, 60, or 90 days.

Just like the previous small business loan options we discussed, there are no interest charges. Instead, you’ll pay a fixed fee for this business loan. American Express may auto-debit your repayment amount at the end of the term or you may pay the money back as you go.

Who Qualifies for American Express Small Business Loans?

So, are any of these American Express small business loans for you?

Most importantly, in order to pursue this financing option, you have to either use American Express credit cards or be a merchant that accepts American Express credit cards for your business.

American Express small business loans are repaid when they take a portion of your Amex card transactions or use your associated bank account—so accepting American Express cards is the absolute baseline for eligibility.

After that, American Express looks at the following qualifications that most small business lenders look at:

  • Annual revenue: American Express wants to see that your business brings in a minimum of $50,000 in annual revenue.
  • Credit and debit card receivables: Because much of this financing is based on your credit card sales volume, American Express checks to see that you have a minimum of $12,000 in annual credit and debit receivables.
  • Time in business: Like most business lenders, American Express looks to see if you’ve been in business for at least 24 months.

Advantages of American Express Small Business Loans

As you’re deciding whether an American Express small business loan is right for your business, there are both pros and cons to consider. Here are some advantages to keep in mind:

Simple application process

The application process for any product in the Merchant Financing program is fully online. Typically, you just need to submit a few different documents: tax returns, bank statements, and monthly statements from credit card processors.

Fast time to funding

If you’re looking for quick business loans, then an Amex small business loan could be a good fit. In the best case, you could be approved for business funding the next day.

The speed of the funding depends on a few different factors, including your credit card processing agreements, the repayment method you choose, the loan amount, and the product term you’re applying for.

(Relatively) affordable

As far as fast, easy financing goes, American Express business loans offer relatively affordable rates. Compared to similar products, like merchant cash advances, American Express small business loans have a very affordable effective APR range.

Automatic payments

Unlike other small business financing products, your business loan repayments are automatically deducted. No checks necessary (and no fear of missing payments).

Prepayment discounts

Other small business lenders don’t let you repay your financing early (or charge you a prepayment penalty if you do). However, if you can manage to pay off your Amex loan early, you can stand to save a fair amount of money in the rebate.

Disadvantages of American Express Small Business Loans

Now, here are some downsides to American Express business loans that you should consider before signing the dotted line.

Short terms

If you qualify for a larger loan amount with American Express, that’s a lot of cash to pay back over a short amount of time—even if you qualify for the longest term (two years). You won’t have the debt on your books for too long, but you’ll have high repayment amounts.

High(er) APRs

Again, when compared to similar financing products, American Express small business loans are relatively affordable. However, if you can qualify for other products—like medium-term loans, SBA loans, or business lines of credit—you’ll certainly find lower rates for your business.

Tough on cash flow

If you choose to have Amex collect repayment by taking a fixed percentage of your daily credit and debit card sales, that can seriously cut into your week-to-week cash flow.

(Relatively) more stringent requirements

Whereas merchant cash advance companies and some short-term lenders work on very few qualification standards, American Express does look at your business financials pretty closely before they approve you for an American Express business loan. However, you’ll find that their requirements are much more manageable than that of a bank, SBA lender, or longer-term lender.

Consequences if you can’t repay

As with any small business lender, American Express has different consequences if you can’t pay—which they outline explicitly on their website. If you can’t pay in full one month, that affects the amount you’re disbursed the next (for the Settlement Advance).

If you repay less than 70% of the funded amount, Amex could initiate an ACH debit from your business’s bank account on file for the amount unpaid.

For the one- or two-year financing, failure to pay in full at the end of the term results in a repayment rate of 100% until the outstanding balance is repaid. Or they could simply initiate an ACH debit to collect on the amount unpaid.


An American Express business loan can help you meet a variety of business goals. As long as you qualify, it should definitely be on your radar. Depending on your situation, you can get approved quickly and receive the money the very next business day.

Be sure to look into all the American Express loan options available to you and weigh the pros and cons of each. This way you can make an informed decision. American Express business cards are also a viable option for small business owners.

Of course, other lenders provide small business loans as well. At Fora Financial, we provide flexible financing options to small business owners nationwide.

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