Whether you need a term loan, line of credit, equipment financing or alternative forms of funding, $1 million business loans can come in a multitude of forms. For a loan of this size, you typically need good credit and an established business to qualify, although there are some lenders and loan types with more lenient requirements. Be sure to compare multiple options to find the best rates and terms.
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 need to submit an application through an SBA-approved lender.
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Although each lender has its own process, these steps should help guide your business toward the right loan option:
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:
The cost of a $1 million business loan varies depending on the lender and type of loan. For example, a traditional bank business loan might start as low as 7% to 8% APR, while SBA loan rates are capped at the prime rate plus 3% to 6.5% for 7(a) loans. You may also have to pay origination or other fees, which can significantly add to the loan’s cost.
For short-term financing like lines of credit, APRs can run much higher — typically starting around 10% for the best credit borrowers and exceeding 60% APR for borrowers with lower credit scores. Other short-term options like business cash advances and invoice factoring and financing are typically the most expensive forms of financing.
You can use our business loan calculator to compare monthly payments and the total loan cost based on different rates and loan terms.
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Large business loans for $1 million can cover a wide range of business needs. Here’s a list of the most common types of business financing.
One of the most popular types of business loans is term loans, offered by the majority of business lenders, with both short-term and long-term options. Loan amounts can reach up to $5 million or more, and you can typically find some of the most competitive rates in the business loans marketplace. Term loans offer lump sum funding and equal monthly payments. But you’ll likely need strong credit and financials to qualify, particularly with a bank versus an online lender.
A business line of credit is a flexible form of business funding. It works kind of like a credit card, where you can borrow money as often as you need it up to your credit limit, and it replenishes as you pay it back. Business lines of credit can be useful if you don’t know how much you need to borrow, have an ongoing project or need an emergency fund. But unlike credit cards — which have virtually unlimited loan terms — LOCs typically have loan terms of 24 months or less.
Federally backed SBA loans can reach as high as $5 million or more, with loan terms of up to 25 years and a variety of loan types to choose from. Because they’re guaranteed by the Small Business Administration — up to as much as 90%, depending on the loan type — they present a lesser risk for lenders, which can make them easier to get for certain borrowers. But SBA loans have fairly strict requirements and the loan process can be lengthy.
If you’re looking to buy property, a commercial real estate loan usually makes the most sense. These loans are comparable to a residential mortgage, and the terms are similar as well. Borrowing limits can easily reach up to $1 million or more, and real estate loans typically have long terms and competitive rates. But you’ll usually need to make a down payment of at least 10%, and because the loan is secured by the real estate, you risk losing the property if you fall behind on payments.
Another type of secured loan is equipment financing, where the purchase acts as collateral for the loan. And because the loan is secured, you can often get a lower rate than an unsecured loan. But as with any secured loan, you risk losing the asset if you can’t make your loan payments. Plus, you may need to make a down payment, depending on the lender.
A business cash advance — also known as a revenue advance or merchant cash advance — is a way to borrow money based on your future sales or revenue. Lenders that offer business cash advances will advance you a lump sum that you’ll then repay in weekly or daily repayments as you bring in new revenue. How much you can borrow depends on your monthly sales volume. Cash advances are typically only meant for short-term funding needs, as it’s typically an expensive form of financing.
A type of short-term funding, invoice factoring might be an option if your company invoices other businesses or government agencies. How it works is you sell your outstanding invoices to a factoring company — for a percentage of their worth — in exchange for cash. Then, as your customers pay the factoring company, you’ll receive the remaining balance less fees. Funding is typically fast for invoice factoring, but it’s expensive.
Similar to invoice factoring, invoice financing also leverages your invoices for cash, except you don’t sell your invoices. Instead, you take out an advance based on a percentage of your unpaid invoices and repay it as your customers settle their bills. Invoice financing might make more sense if you prefer to maintain control of your invoices, but it’s a pricey form of funding.
If your credit isn’t the best, look for lenders that have more lenient requirements to qualify for business loans, such as online lenders. You may also have better luck getting a secured loan because lenders might be more likely to extend a loan if there is collateral to fall back on if you can’t repay it.
Another option is to look for loan types that aren’t as concerned with your credit score, like invoice factoring or merchant cash advances. In any case, you should expect to pay more for business funding if you have poor credit, but there are a number of solutions for borrowers of all credit types.
Well-established enterprises with high annual revenues are most likely to qualify for business loans of $1 million or more. To find the best deal for your business, compare multiple business loans and do your research on what you can expect to pay in interest.
Compare seven fintech small business loans by loan amount, term and APR — verified straight from each lender’s site.
Bank of America offers secured and unsecured business loans and lines of credit for established small businesses.
Wells Fargo offers unsecured lines of credit, secured Prime Lines and SBA loans for small businesses.
OnDeck offers business term loans and lines of credit, but it’s not the cheapest option out there.
A review of Chase business loans, including term loans, lines of credit, commercial real estate financing and SBA loans.
Biz2Credit connects you with lenders to get a loan to grow your business. Compare the loan types offered and see how they stack up to other business loans.
Getting a business loan can be hard when banks and other traditional lenders have strict requirements. See what startup loan options are available.
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what is the lowest interest rate one can get for a one million dollar unsecured loan?
Hi Sybil,
Thanks for getting in touch with finder. I hope all is well with you. :)
As of now, we currently don’t have this specific information since most lenders would not go far from the average market interest rate. However, generally speaking, online lenders tend to charge a higher interest rate compared to traditional banks. Perhaps, you can also take into consideration SBA loans. They could be the one that offers the lowest interest rate since they are partly backed up by the government. However, getting approved by them is not that easy.
I would highly recommend that you consider all your options. Check terms and conditions and eligibility requirements. From there, you should be able to find the right loan for you.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua