$1 million business loans

How to get a $1 million business loan

Although each lender has its own process, these steps should help guide your business toward the right loan option:

1. Compare lenders. Your first step should be to compare business loan lenders. Not every lender offers loans of $1 million, and those that do will have different requirements that could make the difference between approval and rejection.
2. Prepare financial documents. Lenders want to see your business plan, annual revenue projections, bank statements, tax documents and other information that demonstrates your business’s ability to repay a loan.
3. Speak with a financial advisor. Loop a financial advisor into your plan for a $1 million business loan to ensure your business can afford it and develop a plan to repay it.
4. Apply for preapproval. This allows you to see your loan’s potential terms before your personal or business credit is officially checked. Not all lenders offer preapproval, but if it’s available, take advantage of it.
5. Review and sign the loan contract. If approved, review your loan contract with your partners and financial advisor to ensure the terms are beneficial for your business.

Compare providers that offer $1 million in business financing

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Where can I get a $1 million business loan?

Banks, credit unions and online lenders frequently offer loans up to $1 million for established businesses. The Small Business Association (SBA) also backs loans of $1 million, but to apply for funding, you will need to submit an application through an SBA-approved lender.

$1 million SBA loans

Since SBA loans are guaranteed by the federal government, they’re one of the most affordable options out there for a small business owner looking for a large loan. They’re also one of the most difficult loans to qualify for. Only 100,000 applicants were approved across all SBA programs in 2019, according to data from the SBA.

Here’s how a $1 million loan breaks down for the SBA 7(a) program:

• Percent guaranteed: 75%
• Amount guaranteed: $750,000
• Closing costs: Guaranty fee equal to 3.5% of the amount guaranteed, or $26,250, plus any additional charges by the bank or lender
• Maximum interest rate: Prime + 2.75%
• Terms: 5 to 10 years for working capital and equipment; up to 25 years for real estate

How hard is it to get a $1 million business loan?

It depends on you and your business. If you exceed a lender’s minimum requirements, you might not have any trouble. But if your business is less than a year old, not yet profitable or you have poor personal credit, you could have trouble qualifying for $1 million. Having an unpredictable cash flow or low revenue can also get your business rejected.

Is my business eligible?

Your business needs to prove it can afford a $1 million business loan. While requirements vary by lender, you’ll typically need to meet the following criteria to be considered:

• Good to excellent credit. Lenders look for high personal and business credit scores. The better your credit scores, the better.
• Two years in business. Lenders are generally wary of giving this amount to businesses that are new to the game, especially if you’re applying with a bank.
• $10 million in annual revenue. The higher your loan amount, the higher your revenue requirements. It might be possible to find $1 million in financing with revenue under this amount, but it won’t be easy.
• Large profit margin. On top of having a strong annual revenue, many lenders want to see that your business is actually making money rather than breaking even.
• Personal guarantee. Many business loans require the owner or owners to back the amount they’re borrowing with a lien on their personal assets. You and your business partners will likely need to have at least $1 million in equity on your homes, cars and other investments.

How much will it cost to pay back a $1 million business loan?

$1 million business loans tend to come with longer terms — typically between 10 to 25 years — and lower rates. But monthly repayments tend to be high because the principal is so large. On average, online lenders tend to offer higher rates than local banks, so you might want to go with a bank you trust if keeping the cost down is your top priority.

Say your business qualified for a business loan of $1 million with an APR of 7% and a term of 10 years. It’d have monthly repayments of $11,610.85 and pay a total of $393,301.75 in interest and fees.

You can determine the cost of a $1 million loan with our calculator.

Bottom line

Well-established enterprises with high annual revenues are most likely to qualify for business loans of $1 million or higher. To find more lenders and learn about your other financing options, check out our business loans guide.

Frequently asked questions

• Will I be able to find an unsecured business loan for $1 million?

  It depends on your business’s revenue, age and profit. In general, lenders will require your business to back your loan with an asset, but there are lenders that offer both secured and unsecured loans for loans of $1 million or larger.

• Are startups eligible for $1 million business loans?

  Probably not. Even business loans for startups typically stop well under $1 million. Instead, you might want to tap into other resources like crowdfunding, investors or grants.

• Can I get a $1 million business loan with bad credit?

  It’s possible, though it might not be cheap or easy to find a lender willing to offer that amount. Typically, you need good or excellent credit to qualify for the most competitive rates on large loans.

• Can I buy a business with a $1 million loan?

  Yes. Many lenders offer financing designed to cover business acquisition costs.