
- Required time in business: 6+ months
- Required monthly revenue: $10k+
- Min credit score: No credit needed
A $400,000 business loan comes in many forms, including lines of credit, term loans, SBA loans, merchant cash advances and more — and you have several options to suit a range of credit scores.
Generally, you’ll need at least a couple of years in business and to make over six figures to qualify, though eligibility varies by lender. Weigh multiple lenders to make sure you find the best rates and terms.
Most lenders offer $400K business loans, including banks, credit unions, the Small Business Administration (SBA) and online lenders. Established businesses might find the best rates on a business loan of this size with a large national bank. Newer businesses may have better luck with alternative online lenders or SBA loan providers, since it has more relaxed eligibility requirements.
Select your time in business, annual revenue and credit score ranges to find lenders you might qualify with. Select Go to site to get started on your application. Or, visit our review page by choosing More info.
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The application process for a $400,000 loan varies by lender but generally involves the following steps:
While a $400,000 business loan is below the average borrowing amount of $660,000, it may still be difficult to qualify if you recently started your business.
To qualify for a loan of this size, you typically need:
You can expect competitive rates for a $400,000 business loan if you have strong credit and business financials. However, how much you pay comes down to what kind of loan you get.
For example, a traditional bank term loan may have rates that start around 8% APR, and the SBA caps its 7(a) rates at the prime rate plus 3% (as of January 2025). And for loans under $1 million, SBA upfront fees are at 0%.
Some business loans may also charge origination fees — of about 1% to 5% of the loan amount — or other fees that add to the loan’s cost. Business lines of credit, for example, may come with a number of fees, so it’s important to be aware of any additional costs to borrow money besides interest rates.
Use our business loan calculator to find out how much your loan might cost based on different rates and terms.
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Most $400,000 loans are term loans with fixed or monthly repayments, while some short-term business loans may require more frequent repayments, such as biweekly, weekly or daily. It’s important to review the repayment terms before finalizing the loan agreement to ensure you can meet payments.
If you apply for a merchant cash advance, you’ll repay your loan with a percentage of your business’s daily sales. If you get an advance on your unpaid invoices with invoice factoring, you won’t repay the factoring company — you just won’t get your invoice’s total value.
The following are common types of business loans that finance up to $400,000 or more:
Term loans are the most common type of business loans, and they come with both short-term or long-term options. Interest rates are typically fixed, meaning you’ll repay the loan in equal monthly installments. However, some short-term loans may have weekly payments. Larger term loans — especially from national banks — may have strict requirements to qualify but usually offer competitive rates. Online lenders may have higher rates but can be easier to qualify for.
A business line of credit offers you access to a revolving credit limit that replenishes as you pay it back — although some business LOCs treat each withdrawal as a short-term loan. In general, an LOC acts similar to a credit card but gives you access to cash. It’s one of the most flexible types of business funding because you only pay interest on the funds you use, but loan terms are usually less than 24 months.
Backed by the federal government, SBA loans are provided by banks, credit unions and online lenders. This means if you can’t pay your loan back, the Small Business Administration (SBA) will cover up to 90% of the loan, which can make it easier for some businesses to qualify. However, SBA loans have strict requirements and the application process typically takes longer than for most types of business financing.
Equipment loans are a type of financing where the purchase secures the loan — like a car loan — meaning you may qualify for a lower rate than with an unsecured loan. But the downside of equipment loans is that your asset can be seized if you can’t make the payments. Plus, while some equipment lenders finance 100% of the purchase price, others may require a down payment.
If you’re looking to purchase a commercial property or a new building to expand your operation, a commercial real estate loan may be your best financing option. The purchase acts as collateral for the loan, which means you may be able to get a better rate than you could with an unsecured loan. But you’ll typically need to come up with a down payment of at least 10%, and like an equipment loan, you risk losing the property if you can’t afford the payments.
If your company does a lot of debit and credit card sales, a merchant cash advance is an option, although it’s one of the more expensive forms of financing. You take out an advance based on a percentage of your future card sales and pay it back, plus fees, with weekly or daily repayments. This type of funding makes the most sense for retailers, e-commerce businesses or others that have a lot of credit card sales.
Invoice factoring is a type of short-term funding that isn’t a loan at all. Instead, you sell a percentage of your outstanding invoices to a factoring company in exchange for a lump sum of cash. Then, as your customers pay the factoring company directly, it sends you the difference minus its fee. While invoice factoring typically offers fast funding, rates are high.
Similar to invoice factoring, invoice financing also uses your invoices as leverage for funding. But instead of selling your invoices to a factoring company, you take out an advance based on a percentage of the unpaid invoices. As your customers settle their bills, you’ll repay the advance plus fees. The advantage of invoice financing over factoring is you maintain control of your invoices, but it’s expensive and the repayment schedule can be rigorous.
Secured loans require collateral, making them easier to qualify for if you have a lower credit score. You’ll need some type of asset that can back the loan, which goes through an appraisal process. These types of loans may offer a shot at lower APRs and more favorable terms since the lender is minimizing its risk with your collateral on the line.
Unsecured loans don’t require collateral but may require a personal guarantee and typically come with higher costs and APRs.
To get a $400,000 business loan, you may need several years in business as well as a good credit profile, though some lenders have less strict requirements. Compare top business lenders and get prequalified to find the best options for your situation.
Yes, you can opt for a $400,000 SBA loan. These loans offer low rates and higher amounts to business owners who have a tough time qualifying with other private lenders. But the process is competitive, and many applicants don’t walk away with an approved loan. Usually, the higher the loan amount, the more annual revenue you need.
You may be able to get a $400,000 business loan with bad credit if you apply for a merchant cash advance or invoice factoring or financing — but you’ll need the revenue or unpaid invoices to support this loan amount. However, prepare to pay more in fees and interest if you get a bad credit business loan.
Yes, but it’s not that common for startups or new businesses to get a startup loan of this amount. Lenders such as banks, SBA lenders and online lenders may be open to working with startups seeking this amount, but only if you meet strict requirements.
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