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A $400,000 business loan comes in many forms, from lines of credit to term loans, and you’ll have several options to suit a range of credit scores.
Generally, you’ll need at least a couple of years in business and make over six figures to qualify, though eligibility varies across lenders. Weigh multiple lenders to make sure you find the best rates and terms.
Where to get a $400,000 business loan
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. However, newer businesses may have better luck with alternative online lenders or SBA loan providers.
Compare $400,000 business loans
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.
What type of $400,000 business loans are available
Business loans that finance up to $400,000 for your business can cover the following.
Type of financing
Description
Use
Short-term business loan
An unsecured lump sum loan with repayment terms of up to 18 months
To cover unexpected costs or to survive a downturn
Business term loan
A standard bank type loan with fixed repayment terms
Businesses looking to expand or refinance existing debts
Business line of credit
A revolving line of credit for ongoing expenses
Short-term financing needs, managing cash flow or handling unexpected expenses
Merchant cash advance
A lump sum payment in exchange for a percentage of future credit card sales
Businesses with high and consistent credit card sales or those unable to obtain financing elsewhere
SBA loan
A low interest small business loan partially backed by the government
Various purposes, including working capital, purchasing real estate and refinancing existing debt
Equipment financing
Loans specifically for the purchase of equipment
To acquire equipment without large upfront payment
Inventory factoring/Inventory financing
A loan secured by businesses’ inventory
To free up cash tied to inventory
Commercial real estate loans
Loans for purchasing property for business use
Businesses looking to buy, refinance or develop commercial property
Secured vs. unsecured business loans for $400,000
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 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.
How to qualify for a $400,000 business loan
While a $400,000 business loan is below the average borrowing amount of $660,000, it may still be difficult to qualify for if you just started your business.
To qualify for a loan of this size, you typically need:
Good personal credit. Banks typically require a personal credit score of 680 and up, while online lenders may go as low as 520 for short-term financing like MCAs. And for invoice financing or factoring, your credit score may not factor in at all.
Meet revenue requirements. As a rule of thumb, lenders will loan you 1x to 1.5x of your monthly revenue.
At least a year in business. While you may find some types of lenders or loans willing to work with at least six months in business, most lenders require one to two years in business for this size of loan.
A business plan. A business plan shows your lender how you’ll be bringing in revenue.
A personal guarantee. The lender may also ask you for a personal guarantee, especially for unsecured loans not backed by business assets.
You can expect competitive rates for a $400,000 business loan if you have strong credit and business financials. However, how much you pay really comes down to what kind of loan you get. As an example, a traditional bank term loan may have rates that start at 8% APR, while the SBA caps its rates at the prime rate plus 2.25% to 2.75% for most programs. And for loans under $1 million, SBA fees are at 0%
Use the calculator below to find out how much your loan might cost based on different rates and terms.
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.
The application process for a $400,000 loan varies by lender but generally involves the following steps:
Determine the type of loan you need. Whether it’s a term loan for one-time costs or a line of credit for ongoing expenses.
Compare lenders offering $400,000 loans. Consider factors such as APR, terms and funding speed.
Check your eligibility. This may involve filling out an online form for online lenders or contacting a bank directly.
Gather the required documents. This includes personal and business tax returns, profit and loss statements and bank statements.
Fill out the application. This can take from a few minutes to over an hour, depending on the lender and loan type.
Submit any additional information. Then review and sign the loan contract once approved.
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.
Can I get a $400,000 SBA loan?
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 amounts, the more annual revenue you need.
Can I get a $400,000 loan with bad credit?
You may be able to get a $400,000 business loan with bad credit if you apply for a merchant cash advance or invoice 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.
Can I get a loan for $400,000 to start a business?
Yes, but it is not that common for startups or new businesses, since $400,000 is a large 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.
To get a $400,000 business loan, you may need several years in business as well as a good credit profile, though not always required. To compare lenders and get prequalified, see our guide to the best business loans.
Dhara Singh is a freelance personal finance writer at Finder specializing in loans. Formerly she was a top 10 journalist at Yahoo Finance with more than 38+ million content views where she covered retirement and mortgages. She has also written for Bankrate, and CNET and continues to write for a variety of outlets, such as Investopedia and Worth magazine. Her articles focus on equipping readers with the right information and data so they can make the most informed decisions related to their finances.
Dhara previously worked as an insights analyst for Finder’s PR team, where she started the Deadliest Cities to Drive series in 2018, connecting interesting data analysis to a suite of car insurance products. When she’s not writing, Dhara coaches small business owners through her Stories to Sales programs and empowers them to use their life experiences to help other people. She has also self-published a poetry book on Amazon called Tell her She’s Lovely.
Dhara holds a B.S. in Finance and Supply Chain Management from Rutgers University and a M.S. in Journalism from Columbia University.
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