You can get term loans, lines of credit, SBA loans and less traditional business financing for $2 million, but it’s not as easy to qualify for as smaller business loans. Lenders that offer loans of this size prefer to work with well-established businesses that make millions of dollars a year and have excellent credit.
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Your business can apply for a $2 million business loan from a bank, credit union or online lender. Banks and credit unions typically have stricter requirements than online lenders but typically offer lower rates. Online lenders accept smaller businesses, but you’ll still need to meet specific criteria to qualify and rates are generally higher.
Most lenders have strict requirements to qualify for a business loan of this size.
How much you’ll pay in interest for a business loan depends on your business financials, the lender and the type of funding you’re applying for. Generally, $2 million is on the higher end of what most lenders offer — if they even offer loans of this size at all. Expect repayment terms from seven to 25 years and rates on the lower end from 7% to 15% APR.
For example, if you were to take out a $2 million business loan at a 9% APR with a 15-year term, your business would be on the hook for monthly repayments of $20,285.33 and a total loan cost of $3,651,359.70.
However, repaying the loan early can significantly reduce how much you pay in interest. Be sure to ask about prepayment penalties if you plan to pay the loan off before the term is up.
Use our calculator to compare monthly payments and the total cost of a $2 million dollar business loan based on different rates and loan terms.
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You have a wide range of loan options when it comes to $2 million business loans, even though loans of this amount are typically on the higher end of what lenders offer. Which option is best for you depends on your business and its needs.
A term loan gives you a lump sum of financing, which you repay plus interest and fees over a set term — usually seven to 25 years for a $2 million loan. It’s meant to cover a one-time business expense and typically requires collateral for loan amounts of this size.
For an ongoing project where you need access to cash, a business line of credit may make more sense. It allows you to draw from a $2 million credit line as needed — and you only pay back what you borrow. These tend to also have rigorous credit standards and are typically secured by your business assets.
Equipment financing is a term loan backed by the equipment you buy. Some lenders will finance 100% of the purchase price, but for a $2 million loan, you may need to make a down payment of around 10% to 20% to qualify. And your loan amount is based on the value of the item you’re purchasing.
To cover such a large amount, many lenders work with the SBA. When you borrow, the SBA backs a portion of your loan, which reduces the lender’s risk and can help reduce your rates. Two programs offer $2 million loans:
The application process takes longer than other types of business loans, and it’s harder to be approved. However, if you meet the requirements set by the SBA, your business may be able to borrow $2 million at a very competitive rate.
If you want to purchase property, a commercial real estate loan is typically your best financing option. Just like with a residential mortgage, the purchase acts as collateral for the loan, and you’ll usually get a better rate than you would with an unsecured loan. But you’ll need to come up with a down payment of at least 10% of the purchase price.
A merchant cash advance — also known as a revenue advance or business cash advance — is a form of short-term financing based on your future sales or revenue. The amount you can borrow depends on your monthly revenue, which will need to be high for a $2 million advance. You’ll pay the advance back with weekly or daily repayments that are typically deducted automatically from your account. Revenue advances normally offer fast funding, but it’s expensive.
Another type of short-term funding is invoice factoring, where you sell your outstanding invoices to a factoring company in exchange for a lump sum of money. The factoring company may advance around 80% to 90% of your invoices’ value, and it takes over the collection of those invoices. As your customers settle their bills, the factoring company will send you the remaining balance minus its fees, which can be steep.
If you prefer to maintain control over your customers’ invoices, you may want to consider invoice financing over factoring. Instead of selling your unpaid invoices, you essentially use them as collateral for an advance and then repay it as your customers pay you. Funding is typically fast, but rates can be high. Plus, you run the risk of incurring late fees if your customers don’t remit their invoices on time.
If your credit is poor, you may be able to get a $2 million loan if you offer collateral to secure the loan. The collateral could be any valuable business asset, such as real estate, equipment or inventory. But the asset needs to be appraised to determine its value, and losing it — if you can’t repay the loan — could be detrimental to your business.
Or, you could apply for a merchant cash advance, invoice financing or invoice factoring, where your credit score isn’t as heavily weighted as your cash flow, revenue or value of invoices. But those options aren’t suitable for some businesses, and they’re typically the most expensive types of business financing.
Though not as common as small-dollar business loans, it’s still possible to find $2 million in financing from the standard providers: banks, credit unions and online lenders. But you might have trouble qualifying for a competitive rate if you don’t have good credit or enough revenue to afford the five-digit repayments. Compare multiple business lenders to find the best deal for your situation.
You might be able to find a $2 million business loan that doesn’t require collateral if you have excellent credit and high revenue. But you and your business partners will typically be required to sign a personal guarantee, meaning you’re responsible for repaying the loan if your business can’t.
Most online business lenders offer loans of less than one million, although some may offer larger business loans and go as high as $2 million or more. Traditional bank loans and SBA loans usually top out at around $5 million. However, National Business Capital — an online business loans marketplace — claims to offer loans up to $10 million.
A $2 million loan is considered relatively hard to get. You’ll typically need to have a well-established, profitable company with high revenue and a good credit score. You may also need to have business or personal assets that are worth at least as much as the loan amount.
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.
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