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$5 million business loans
Find financing to grow your business — or even buy another.
Business loans in amounts as high as $5 million can be difficult to qualify for and often take a while to process. That’s because lending that much money poses a greater risk to the lender than small-dollar financing. Banks tend to offer higher amounts than other types of lenders, though you can still find a few online business loan providers willing to offer $5 million in funds.
What's in this guide?
Our top pick: National Business Capital Business Loans
- Approvals within 24 hours
- No industry restrictions
- High approval rate
- Startup financing options
Our top pick: National Business Capital Business Loans
- Min. Loan Amount: $10,000
- Max. Loan Amount: $5,000,000
- Requirements: Your company must have been in business for at least 6 months and have an annual revenue of at least $100,000.
Compare $5 million business loans
Updated December 6th, 2019
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Where can I get a $5 million business loan?
You can get a $5 million business loan from banks, credit unions and online lenders. Generally, large banks offer higher amounts of funding than online lenders — the average business loan size at large banks was over five times that of online lenders, according to a 2017 survey by the Federal Reserve. But it’s still possible to get funding of that size online — if you have the collateral to back it.
How can I qualify for a $5 million business loan?
You’ll need to meet stricter eligibility requirements to take out a $5 million business loan than if you were looking to borrow a smaller amount. While exact criteria will vary by lender, you typically need a well-established business that earns revenue high enough to afford monthly repayments on a loan this large.
You’ll also have an easier time getting approved if you have strong personal credit, an existing relationship with the bank or lender, and can back the loan with collateral.
Ask an expert: What will lenders look at when considering my application?
Thomas Ulbrich
Executive Director of the University of Buffalo School of Management’s Center for Entrepreneurial Leadership
A traditional bank and most other lenders will want to review your credit history, standard business financial ratios, several years of your income statements, balance sheets and cashflow statements.
They will have parameters in place as to the amount they will lend based on a business’s ability to repay the loan. In short, they want their money back with interest and will scrutinize everything until they’re confident you have the ability to repay the loan.
It’s in their best interest to be risk averse and they will not lend if outside their risk tolerance. High-risk or high-return potential loans are often left to private investment and venture capital.
How much will a $5 million business loan cost?
Business loans of $5 million typically come with the longest terms available — somewhere around 10 to 25 years, depending on the lender and loan type.
Since you generally need to have strong personal and business financials to even qualify, you’ll likely be able to get a competitive rate — maybe around 6% to 11%. But even a low interest rate and long term can still spell high monthly repayments. A $5 million loan with a 25-year term at an interest rate of 10% would cost $45,435.04 a month.
Let’s take a look at an example …
Spencer owned a campus bookstore called Bookends. The business was doing well enough that he decided to open a second location in the area. But real estate in such a prime location wasn’t cheap, and he needed to take out a $5 million business loan to cover the cost.
After narrowing down his options, Spencer decided to apply for a Small Business Administration (SBA) 7(a) commercial real estate loan. Since he had little time to spend on the application, he chose to work with SmartBiz — a connection service that helps you with the paperwork, connects you with a lender and speeds up the process.
He applied and qualified for a $5 million loan with the following rates and terms:
- Interest rate: 7.5%
- Term: 25 years
- SBA guarantee fee: $138,125
- Referral fee: $25,000
- Packaging fee: $25,000
- Bank closing fee: $5,000
This broke down to $193,125 in closing costs — which Bookends paid up front. The loan cost $36,949.56 a month — with a total $6,084,867.67 paid in interest over the life of the loan.
4 types of $5 million business loans
The type of loan you need depends on how your business plans on using the funds and what you can qualify for. For loans of this size, you generally need to provide collateral to back the loan, such as real estate or other business assets.
Business term loan
Term loans come in one lump sum that you repay in installments over several years — usually 10 to 25 years for a loan of this size. These are often best for one-time expenses with costs that are easy to predict. You typically need to have good to excellent credit to get this loan, in addition to a high enough revenue to afford repayments.
Consider using a term loan if …
- You have a one-time expense.
- You and your business are strong financially,
- You have time to spend on the application.
Consider other options if …
- Your costs are unpredictable.
- You or another business partner have poor credit.
- Your business needs money fast.
Business line of credit
Not sure you’ll need exactly $5 million? Taking out a business line of credit might be a better option. This allows you to draw up to $5 million from a credit line. You either pay back each draw in fixed installments or with a minimum monthly payment. Like with a term loan, your business finances and personal credit need to be strong for such a high credit limit.
Consider using a line of credit if …
- You’re funding an ongoing project.
- You want to have cash available to cover unforeseen costs.
- You and your business have strong financials.
Consider other options if …
- You only need a one-time loan.
- You don’t need continual access to cash.
- You or your business partners have poor credit.
SBA 7(a) loan
The SBA offers loans up to $5 million through its popular 7(a) program. With these loans, the government guarantees up to 75% of the amount you borrow, making it easier to qualify for more competitive rates.
These loans are available to businesses that have struggled in the past to secure funding — though they’re still hard to qualify for. They also require a lot of paperwork, and the entire process can take months to complete.
Consider using an SBA 7(a) loan if …
- You have months to complete the application process.
- You’ve unsuccessfully applied for $5 million in the past.
- You and your business partners can meet the SBA’s eligibility requirements.
Consider other options if …
- You lack the resources for a drawn-out application.
- You haven’t already applied for funding elsewhere.
- You need money immediately.
Invoice factoring
This option allows you to sell your unpaid invoices from other businesses and government agencies to avoid breaks in cash flow. Typically, you can get around 80% to 95% of the value of your business’s unpaid invoices. Rather than interest, companies charge a flat fee called a factor rate. You don’t need to have excellent credit or even strong revenue to qualify, though these loans are typically more expensive than other options.
Consider using invoice factoring if …
- You have $5.26 million to $6.25 million in unpaid invoices.
- You need funding fast.
- You or your business partners have poor credit.
Consider other options if …
- You have strong credit.
- You don’t rely on invoices from businesses or government agencies.
- You can qualify for a less-expensive option.
Bottom line
It’s a challenge to qualify for $5 million in business funding — many lenders don’t even offer loans this high. You and your business must be financially sound and have the collateral to back the loan to qualify. You can learn more about how business financing works by checking out our guide to business loans.
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