Medium to Large Business Loans: Requirements, Rates & How To Get
There comes a time for every business when they need a boost in cash to make a big purchase, hire, or smooth over a temporary cash-flow problem. There are plenty of loans available in the $5,000 – $100,000 range for all these needs, but what if you need more?
Perhaps you have been offered a business opportunity that requires sudden expansion, or you need bigger premises, and you want to buy real estate. In situations like these, you need to raise a lot of capital, but is it possible for you to borrow $250,000 – $500,000? What about over $1,000,000?
Today, we’ll show you who you can look to for this level of finance, how you can qualify for loans of this size, and how much a loan of this size may cost.
How Can I Get a Large Business Loan?
Large business loans are understandably harder to come by than small ones. For a business to get a large loan, it needs to have a good track record, have been in business for many years (or have experienced explosive growth in a short time), have a good credit score, and collateral.
When borrowing smaller sums, there are opportunities for those with less-than-perfect financial histories to borrow money, but as the stakes get higher, the qualifications and requirements become tougher to meet.
What Is the Biggest Business Loan You Can Get?
If you are a large organization where turnover is measured in millions or billions of dollars, then the possibilities are endless. For those of us in small to medium-sized companies, then the SBA limit of $5 million is probably the ultimate. With figures larger than this, you need to think about talking multinationals.
How Can I Get a Loan for $1 Million?
Banks, credit unions and online lenders are often prepared to offer loans up to $1 million for thriving businesses, and that includes Small Business Administration loans. $1 million is not the ceiling, and up to $5 million is available, but not surprisingly, you have to prove that your business is robust. That means your past financial record, credit and projected figures are all convincing.
SBA loans are probably the most affordable but also require the highest qualifications. Because 75% of a $1 million loan is guaranteed by the government, SBA lenders are more comfortable with large sums of money and offer good terms, but because they are so highly prized, they can pick and choose who they lend to.
Your chances of securing a $1 million loan (or larger) are good if your business can exceed the application demands. Your business needs to be at least a year old, have achieved a million in turnover, and your credit rating will need to be excellent.
Large Business Loan Requirements
For medium-to-large business loans, you do need to prove that your business is viable and that it is growing. There should be no doubt that large business loans are only available for those with the highest financial credentials. The actual requirements will depend on the loan provider but are likely to include the following:
- A proven track record. Most lenders stipulate that you should have been in business for at least two years and are unlikely to offer large loans to those who are relatively new in the market. This goes double for the more traditional banks.
- A large annual revenue. The majority of loan providers will require you to have a yearly revenue measured in millions of dollars. For a $1 million loan, you are probably looking at a $10 million yearly revenue.
- A high credit score. Lenders are not willing to lend large sums of money to anyone who doesn’t possess a good to excellent credit rating, and that is your personal score as well as the business itself.
- Your profits must be high. A large annual revenue is not enough, your profit margin needs to be good too.
- All the above is not enough, most – if not all – lenders will want guarantees from you and any business partners you may have that the loan amount is matched by assets – your properties and possessions.
How to Qualify for a Large Business Loan
So, how to get a big business loan? To qualify for a medium-to-large business loan, you must tick the above boxes. It is up to you to satisfy the loan providers that your business is reputable, profitable, and will use the money wisely. They want to know their money is safe and will only lend large sums when the risk is low. Lending money is always something of a gamble, but as the stakes get higher, the more the lenders want to know they’re going to see the money again.
If you’ve never had a business loan, you’re unlikely to qualify for a large business loan, so borrow a smaller sum and pay it back religiously. This will set you up for success borrowing larger loans in the future.
With time, you can increase your chances by making your business bigger and better, improving both its output and profitability. You should check your credit score and aim to keep it high or improve it. We all have the right to know exactly what our credit is, and you can find out for free by going to www.annualcreditreport.com.
Large Business Loan Rates
Like all finance options, rates vary for medium to large business loans and depend on the lender, the term, and the amount you borrow.
SBA loans are almost always the lowest. Their 504 loans, purposed for real estate, large machinery and fixed assets, currently run at around 2.33% – 2.88% while the 7(a) loans, more flexible in use, are approximately 5.5% – 9.75%.
What are the Best Types of Large Business Loans?
Probably the jewel in the crown for borrowers, SBA loans usually offer the best rates and most favorable terms of all. The 7(a) loans are available for up to $5 million with terms up to 30 years. The 504 loans are only meant for major asset acquisitions but offer significantly lower rates.
|Loan Amount:||$30,000 – $5 million|
|APR Range:||4.75% – 7%|
|Time To Fund:||Typically take several weeks to fund, but can fund as quickly as within seven days.|
|Loan Term:||10-25 Years|
|Great Option For:||Borrowers with good credit
Funding real estate purchases
|Credit Check?||Soft credit check and hard pull|
|Co-Applicants Accepted?||No cosigners|
|Direct Pay-Off To Creditors?||No|
|Click “Check Rates” to apply to SmartBiz|
» MORE: SmartBiz SBA Loan Review
Traditional Bank Loans
Commercial banks are the go-to loan providers for most small and medium businesses looking for significant cash injections. The criteria for approval will be high, but the rates low and the terms generous, keeping the monthly repayments manageable even when we are considering large amounts borrowed.
Neither traditional bank loans nor SBA loans are easy to get, as their application requirements are strict, and decision times tend to be lengthy.
While SBA and traditional bank loans are usually the best options for medium to large business loans, if your business falls short of the stringent financial requirements necessary to get approval for these, all is not lost.
A medium-term loan from an online provider may give you the money you need, though at a higher cost. The maximum figure will probably be limited to $500,000 and the term generally 5-10 years, which will make the repayments less comfortable. But, such a loan is likely to be much easier to get approval for.
Also, the time it takes between application and approval is usually much shorter. All this comes at a cost, however, with some online lenders charging up to 30% or even more for some financial products.
Three lenders to consider are:
If you have had a financial hiccup in your past and your credit score is less than perfect, then OnDeck may be a good call, particularly if your business is retail or in the foodservice industry.
OnDeck is one of the largest lending platforms for small businesses, and it offers loans of up to $500,000. A credit score of more than 500 and a year in business are mandatory, but the revenue requirement is only $100,000. The current interest rate is around 24.6% for most business loans.
|Loan Amounts||$5,000 to $500,000|
|APR Range||As low as 9.99%|
|Repayment Terms||Term loans up to 3 years|
|Time to Funding||As fast as 1 day|
|Click “Check Rates” to apply to OnDeck|
- Funding Circle
Funding Circle offer loans of $25,000 – $500,000, so are great if you’re looking for a relatively large loan. APR is also good, at 4.99% – 26.99%, over a term of 1-5 years. If you’re looking for a loan to help fund explosive growth, this is a good lender to look to.
|Loan Amount:||$25,000 – $500,000|
|APR Range:||4.99% – 26.99%%|
|Time To Fund:||10 days on average|
|Loan Terms:||One to five years|
|How To Qualify:||660+ Personal Credit Score
No Minimum Annual Revenue
|Great Option For:||Established Businesses, Not Sole Proprietors|
|Click “Check Rates” to apply to Funding Circle|
BlueVine offers invoice advances up to $5 million, and lines of credit and loans up to $250,000, so they offer a lot of flexibility. Rates are a lot higher, as the loan is only short term, but may be an option if you’re looking for a big sum while you wait for a client to pay their invoice.
Taking out any loan is a big step, and you must ensure that you get the right one for your business and circumstances. All lenders vary in their requirements, rates and terms. We help you compare the best loans on the market – simply click here to get started.
|Loan Amounts||$20,000 to $5 million|
|APR Range||15% to 68%|
|Repayment Terms||Up to 13 weeks|
|Time to Funding||N/A|
|Click “Check Rates” to apply to Blue Vine|