Editor's choice: Lendio business loans
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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.
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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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.
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.
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:
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.
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.
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.
See how much you'll pay
|Loan terms (in years)|
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.
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
The following type of SBA loans are available at $500,000:
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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