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How much business lenders offer and how much you can borrow are two different numbers. But the one you might want to focus on is how much you actually need to borrow for your project and how much you can comfortably afford to repay.
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Use our business loan calculator to see how much a business loan will cost you each month before you apply. Enter the loan amount, APR and term you expect to see the monthly payment and total financing cost.
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How to reduce the cost of a business loan
You have a few options to lower the cost of your loan — both in the short and long term.
- Shorten the loan term. A shorter loan term means there’s less time for debt to add up — but it’ll increase your monthly cost.
- Prequalify with other lenders. Different lenders use different criteria when coming up with your loan amount, rates and terms. Prequalifying with a few can help you find a low-interest business loan with lower costs overall.
- Improve your credit. Business lenders typically look at personal over business credit scores, so improving your personal credit score can help you qualify for a lower rate.
- Pay off other loans on time. Having a lower amount of overall debt and a longer history of on-time repayments can also help reduce costs.
- Provide collateral. Backing your loan with business assets in addition to a personal guarantee offsets the risk to the lender and can get you a better deal.
How much do business lenders offer?
Different types of lenders offer different ranges of loan amounts, with banks offering the largest loans and microlenders offering the smallest. Keep in mind that applying for a large amount of funds will also extend the business loan application process.
Bank loans
Banks tend to offer the largest business loans of any provider — especially large, national banks. You can often borrow over $1 million, depending on your business’s finances, collateral and needs. Some larger banks don’t even have maximum borrowing amounts, while community banks might be more limited.
SBA loans
You can borrow up to around $5 million if you get a loan partly backed by the Small Business Administration (SBA). However, getting even more is possible if you take out an SBA 504 loan for equipment or real estate — that program technically has no limit.
Online loans
The best online lenders typically offer financing up to $500,000, though you may be able to find providers that lend as much as $10 million. Larger funding amounts are typically backed by collateral, like equipment or vehicle financing.
Short-term loans
Typically, you can borrow up to $250,000 with a short-term business lender. These loans tend to be lower because your business has less time to pay them off — usually between three and 18 months. As with other types of business loans, larger amounts are typically only available with collateral.
Lines of credit
Business lines of credit typically run up to $100,000. However, it’s possible to get more through the SBA CAPLine program, which offers credit limits of up to $5 million.
Equipment and vehicle financing
Typically, you can borrow between 80% and 100% of the value of the equipment or vehicles you’re purchasing — usually up to $500,000 with a bank or online lender. You can often get more if you apply for an SBA loan.
Microloans
Microloans run from around $500 to around $10,000, depending on the provider. These are meant to fund small startup costs and are usually available to entrepreneurs and bad-credit borrowers. Unlike short-term loans, these typically are available through nonprofits and come with relatively low rates. Microlender Kiva even has a 0% interest program.
Invoice factoring
Selling your invoices to a third party can get you between 80% and 95% of the value of the invoices, depending on the lender. Typically, these are meant to cover cash flow gaps while you’re waiting for payment to go through on a large project and can run as high as $10 million.
Factors that determine how much you can borrow
How much a lender offers and how much you can qualify for are often two different numbers. This depends on several factors, including:
- Revenue. You might need to bring in as much as 10 times the amount you want to borrow if you apply without collateral, depending on the loan amount and lender.
- Current debts. Your monthly debt obligations and expenses should leave enough room to comfortably afford repayments.
- Collateral. Businesses might overlook a lower revenue if you have the assets to back your loan. This can include the equipment or vehicles you’re using the loan to purchase.
- Personal guarantee. Many lenders require owners to pledge to repay the loan if the business defaults. You often have to show you can afford your share of repayments to qualify for the loan amount you want.
- Time in business. The largest loan amounts are typically reserved for established businesses that are less at risk of going under — usually, around three years in business is required.
- Credit score. Lenders typically only offer the highest loan amounts to business owners with good to excellent personal credit.
- Down payment. A down payment shows you have some skin in the game and offsets the risk for the lender. The larger the down payment, the more you might be eligible to borrow.
- Relationship with lender. Many lenders offer higher loan amounts to businesses they’ve already worked with — whether you’ve taken out a loan or have another financial product like a business checking account.
6 ways to qualify for more funds
From applying for government-backed financing to making a hefty down payment, here are a few ways to qualify for a larger loan:
- Put up collateral. Backing your loan with collateral poses less risk for the lender, making them more willing to offer larger loan amounts. You don’t necessarily have to fully back the loan — but the more, the better.
- Don’t skip the down payment. In general, the larger the down payment, the more you can borrow since it shows the lender you’re serious about the project.
- Pay off debts first. The fewer business debts you have, the more you’ll qualify for. Just make sure your lenders don’t charge prepayment penalties before you make any extra repayments.
- Improve your credit score. The higher your personal credit score, the less risk you pose to the lender and the more they might be willing to lend to you. Take steps to improve your score by checking your credit report for mistakes and paying down personal debts.
- Apply for an SBA loan. These loans tend to come in larger amounts than any other type of financing, since they’re backed by collateral, a government guarantee and a personal guarantee. However, they also have a high rejection rate.
- Hold off for now. If your business has been around for less than three years, waiting to borrow might be the best solution. Put off those big, risky expansion plans to focus on building a solid foundation and increasing your revenue.
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