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How to get a $500,000 business loan
Compare lenders to find competitive rates and terms that fit your business's budget.
A $500,000 business loan average is slightly lower than your average business loan — around $660,000, according to the Federal Reserve. That means your business has lots of options when it comes to comparing lenders. Look into a few providers to make sure you're getting the most competitive rates and terms before you apply.
Where to get a $500,000 business loan
Most lenders offer $500,000 business loans, including banks, credit unions and online lenders. Established businesses might find competitive rates on a business loan of this size with a large national bank. Newer businesses might want to try applying with online lenders and SBA loan providers.
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How to apply for a $500,000 business loan
The application process varies depending on the lender you end up with. But you’ll generally follow these steps to find a lender that fits your business’s needs and apply for a $500,000 loan.
- Compare lenders. Find and compare lenders that offer $500,000 loans by looking at factors like the loan’s APR, terms and requirements. Look got lenders that offer well over this amount — it’s often harder to qualify for the maximum loan amount.
- Check your eligibility. Online lenders often have a form you can fill out online to find out if you’re eligible and check your rates. But if you’re applying through a bank, you might have to call in to make sure your business is eligible for a $500,000 loan before you fully apply.
- Gather the required documents. It helps to have your personal and business tax returns, profit and loss statements, and bank statements ready when you first fill out the application to help answer questions. You might also need to submit these documents digitally or physically.
- Fill out the application. This can take a few minutes to over an hour, depending on the lender and type of loan.
- Submit any additional information. Your lender will likely review your application and reach out for more information or documents. Usually you can submit these online, by mail or in person at a branch in some cases.
- Read and sign the contract. Review your final offer, making sure the rates, terms and monthly payments fit your business’s budget. If you agree, sign and submit your contract.
The turnaround time on $500,000 loans is often longer than loans of smaller amounts — lenders tend to be more thorough with your application. While some lenders advertise a 24-hour turnaround time, it could take a few business days to a week to receive your funds.
How to qualify
A $500,000 business loan sits right below average. But it’s still a large enough amount that your small business might have difficulty qualifying if it’s just getting started.
To qualify for a business loan of this size, you and your business must typically meet criteria that include:
- At least one year in business. You might get away with six months in business for smaller amounts, but lenders tend to require stronger business experience for larger loans.
- Good personal credit. Business lenders tend to rely on personal rather than business credit scores, and it’s also common for business lenders to ask for a personal guarantee from the owner. You generally need a credit score of 670 or higher.
- Minimum annual revenue. You’ll need to prove that your business brings in enough money to comfortably repay a loan. It’s not easy to nail down the minimum annual revenue you’ll require for a high-dollar loan, but expect the number to be in the millions.
What credit score do I need?
Typically, you need a personal credit score of at least 670 or higher to qualify for $500,000 in business financing. Generally, the higher your score, the more competitive the options you’ll have to choose from.
Even lenders with low overall credit score requirements might require higher scores for large loans. For example, OnDeck requires a personal credit score of 500 or higher to qualify for a loan in general. But you’ll have a better chance of approval for its maximum $500,000 financing amount if your score is 775 to 800. To compare top options for good credit borrowers, check out our guide.
Unsecured business loans for $500,000
Most $500,000 business loans require some kind of collateral — especially if it’s an equipment loan or for commercial real estate. However, it is possible to get an unsecured business loan of $500,000 from select online lenders.
Typically, you’ll need a higher credit score and stronger business financials to qualify for an unsecured business loan. You also might need to prove more business experience, requiring at least two years of experience for approval.
How much does a $500,000 loan cost?
Since $500,000 business loans tend to have tight credit requirements, if you can qualify for this loan you can likely qualify for a competitive rate.
Depending on your business’s financials and your credit, you can expect an APR on the lower end of the spectrum of rates a lender offers, possibly around 10%. If you apply for an SBA loan, rates are capped at the prime rate plus 2.25% to 2.75% for most programs, depending on your loan term. This doesn’t include SBA loan fees, which vary depending on the loan.
Loans of this size also typically come with a loan term of at least a few years. Use the calculator below to find out how much your loan might cost, based on different rates and terms.
Business loan calculator
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|Loan terms (in years)|
How do payments on a $500,000 loan work?
It depends on your loan. Most $500,000 loans are term loans, which come with fixed monthly repayments. Some short-term business loans come with biweekly, weekly or even daily repayments, though short-term loans in such a high amount aren’t common.
If you apply for a merchant cash advance, you’ll repay it with a percentage of your business’s daily sales. And if you get an advance on your unpaid invoice with invoice factoring, you won’t repay the factoring company at all — you just won’t get your invoice’s total value.
Can I get a $500,000 SBA loan?
Loans backed by the Small Business Administration (SBA) offer low rates and high loan amounts to businesses that have a hard time qualifying elsewhere. But they also come with some of the highest rejection rates in the market. If you decide to borrow
Which SBA programs offer $500,000 loans?
The following type of SBA loans are available at $500,000:
- 7(a) loans. General-use working capital loans for any legitimate expense. This is the SBA’s most popular program
- 504 loans. Real estate and equipment financing. This is the second-most popular SBA program.
- CAPLines. Lines of credit to cover working capital, inventory, unpaid contracts and debt consolidation.
- International Trade loans. General-use working capital loans for expenses related to international trade.
- Export Working Capital loans. Working capital loans to cover export-related costs.
- Export Express loans. Working capital loans to cover export-related costs with a quick turnaround.
- Disaster loans. Financing directly from the SBA to cover your business’s losses during a disaster, including the COVID-19 outbreak.
- Paycheck Protection Program loans. The SBA reopened PPP loans on January 11, 2021, with an end date of May 31, 2021. Loans of up to $10 million are available.
Can I qualify?
To qualify, you must meet the SBA’s laundry list of requirements, including complicated size standards and your personal history of repaying debt. You won’t qualify if you’re a part of the SBA’s list of ineligible industries, including insurance companies and investment banks.
It’s a long process that takes lots of paperwork and several months unless you apply for an express or disaster loan. But services like SmartBiz can help with the SBA process, handling the nitty-gritty and potentially speeding things up.
Don’t look only at your lender’s minimum requirements when applying for a $500,000 business loan. Typically, you’ll need good credit and at least a year in business to get approved for high amounts, even with a secured option.
Get started on your search by visiting our comprehensive guide to business loans, where you can compare lenders and learn more about the nuance of business financing.
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