How to get a $1 million business loan

Applying for a $1 million business loan can give you access to a large amount of cash for your business. That said, these loans typically come with strict eligibility requirements and you’ll often need to make a very high revenue to apply.

Government-backed business loans

Government-backed business loans are the most popular type of $1 million business loans. They are funded by the Canadian government and come with lower interest rates and more flexible terms than private loans.

• Canada Small Business Financing Program (CSBFP) loans. CSBFP loans are backed by a 75% government guarantee and they let you borrow up to $1 million. You can use this money to purchase or improve business assets such as land, buildings, equipment and leasehold agreements. However, you won’t be able to use the loan to fund day-to-day operations like payroll, inventory or other expenses. To qualify, you’ll need to make under $10 million in revenue annually, operate a for-profit Canadian business and use the loan funds for approved purposes.

Business loans from the big banks

All of Canada’s major banks can help you apply for a CSBFP loan, though they’ll take a 2% admin fee for the trouble. Many of them also offer their own $1 million loan programs. The funds you borrow from a big bank can be used to pay for just about anything, including payroll expenses, real estate purchases and day-to-day costs.

• Scotiabank. Scotiabank offers business term loans and lines of credit worth up to $1 million.
• BMO. The maximum amount you can borrow with BMO is $500,000 for a term loan, but you may be able to qualify for $1 million with a BMO commercial mortgage.
• Other big banks. TD, CIBC and RBC market their business loans as starting at $10,000. While they don’t indicate whether they go up to $1 million, you can always call into a bank to find out the maximum loan amount it will give you.

Banks that provide small business loans

Getting a $1 million business loan from an online lender

Getting an online $1 million business is less common, but you may be able to find some options if you look hard enough. Another idea could be to borrow two or more small business loans from several online sources (provided you qualify and have enough money to pay them back). Below are some examples of online lenders that offer small business loans.

Online lenders that offer $300,000 to $500,000

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Name	Product	Interest Rate	Loan Amount	Loan Term	Minimum Revenue	Minimum Time in Business	Loans Offered
OnDeck Business Loan		8.00% – 29.00%	$5,000 - $300,000	6 - 18 months	$100,000/year	6+ months	Secured Term, Line of Credit, Merchant Cash Advance	To be eligible, you must have been in business for at least 6 months with a minimum annual gross revenue of $100,000. OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.	Go to site More Info	Compare	loading Fetching your data...
Merchant Growth Business Loan		12.99% - 39.99%	$5,000 - $500,000	3 - 12 months	$10,000 /month	6 months	Unsecured Term, Line of Credit, Merchant Cash Advance	To be eligible, you must have been in business for at least 6 months and have a minimum of $10,000 in monthly sales. Merchant Growth offers financing tailored to business needs. It specializes in providing capital based on future cash flows, but it also offers fixed solutions. Fill out an application within 5 minutes and get your funds within 24 hours.	Go to site More Info	Compare	loading Fetching your data...
Loans Canada Business Loan		6.60% - 29.00%	$4,000 - $500,000	3 - 60 months	over $10,000/month	100 days	Unsecured Term	To be eligible, you must have been in business for at least 100 days, have a Canadian business bank account and show a minimum of $10,000 in monthly deposits ($120,000/year). Loans Canada connects Canadian small business owners to lenders offering financing up to $500,000. Complete one simple online application and get matched with your loan options.	Go to site More Info	Compare	loading Fetching your data...

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How can I qualify?

Your business will have to prove it can afford to take on a hefty debt load. You may need to meet the following requirements to be considered:

• High credit score. You’ll typically need to have a good to excellent personal credit score (at least 650 or above). The higher your credit score the better, otherwise your business might end up paying a higher interest rate, if it’s approved at all.
• Long time in business. To borrow $1 million, you’ll likely need to have been in operation for at least two years. Some lenders may approve businesses that have been operating for less time – but you’ll usually need a higher annual revenue.
• High annual revenue. Most loans will require you to meet a minimum annual revenue that is high enough to make your repayments on a $1 million business loan. This minimum can sit between $100,000 and $500,000 per year, depending on your lender.
• Decent level of profit. On top of having a strong annual revenue, your lender will want to see that your business is actually making money rather than simply covering its operations. You may need to provide proof of your profit margin to get started.
• Personal assets to put up as collateral. You could be required to put up at least $1 million in collateral to secure your business loan. This means you risk losing assets such as your home or savings account if you default on your loan.
• Able to use the loan for its intended purpose. You could be required to use your loan for specific purchases such as buying real estate or equipment. Check with your lender to find out how you can use your funds before you agree to a loan.

6 steps to borrow a business loan

Follow these steps to find the right business loan for your needs:

1. Compare lenders. Your first step should be to compare lenders to find the best interest rates. It can be difficult to find lenders offering $1 million business loans, but you can still reach out to a few providers to be sure you’re getting the best deal.
2. Speak with a financial adviser. Loop a financial adviser into your plan. They may be able to help you figure out if you can afford your repayments alongside all of your other expenses.
3. Prepare financial documents. Get together documents such as your business plan, annual revenue projections, bank statements, tax documents and other information that demonstrates how you intend to repay your loan.
4. Meet with your lender. You’ll usually need to go into your lender in person to discuss getting a $1 million business loan. There are no online applications to get funding for this large of an amount (and you should be careful with online lenders that do offer these services).
5. Apply for pre-approval. Applying for pre-approval lets you see whether you qualify and what kinds of rates and terms you might get on your $1 million business loan. This can help give you some insight into your loan options without affecting your credit score.
6. Review and sign the loan contract. If approved, review your loan contract with your partners and financial adviser to ensure the terms make sense for your business.

Costs to pay back a $1 million business loan

The amount you’ll pay will depend on the length of your term and what interest rates you get.

• Interest rates. Your business loan interest rate will have a huge impact on how much you pay on your $1 million business loan over time. Taking an interest rate that’s 1% higher can lead you to pay thousands of dollars more in interest over the course of your loan.
• Terms. The length of your term will affect how much you pay in interest and how big your monthly payments are. With a shorter term, you pay more each month but save money on interest over time – and vice versa with a longer-term business loan.
• Fees. You may have to pay set-up or admin fees to get started with a $1 million business loan. For example, with the CSBFP loans you have to pay an administrative fee of 2% on any loan amount you borrow directly to the bank. Learn more about the costs of a business loan.

Types of business loans

There are a couple of different types of business loans you can apply for to get $1 million. The type you choose will determine which lenders you can borrow from.

• Fixed vs variable rate. Fixed rate business loans come with fixed interest rates and consistent payments over the lifetime of your loan. Variable rates fluctuate in line with the prime rate, which means your payments can go up and down each month.
• Secured vs unsecured. Secured business loans are protected by collateral such as your business equipment or personal vehicle (or you can lose your asset if you default on your payments). Unsecured business loans don’t require assets, but they rely on your credit score to get you approved. Find out how much collateral you may need to secure a business loan.
• Term vs merchant cash advance. Term loans are paid back in regular installments over a set term. Merchant cash advances are paid back with a portion of your credit card sales each month.

Business loan calculator

If you have multiple loan or refinancing offers on the table and aren’t sure which one to choose, it can help to calculate the total cost of each loan option.

How do I use the business loan calculator?

To determine how much your business loan will cost you, simply fill out the following fields in the calculator:

1. Loan term and amount. Select how long you need to repay the loan and enter the amount you intend to borrow.
2. Bank name. Enter the names of your lenders.
3. Fixed rate and period. If your loan comes with a special introductory fixed rate, enter the rate and how long the intro period lasts.
4. Ongoing rate. Enter the ongoing rate you’ll pay for your loan here.
5. Upfront fees. If your loan has an origination or application fee, add it here.
6. Fees. If the loan comes with any ongoing fees, you’ll need to add them here and select how often they’re charged.
7. Prepayment penalty. If you’re charged a prepayment penalty for paying off your loan early, enter the amount here.
8. Calculate. Click the Calculate button to see which lender costs less and each lender’s fixed, ongoing and total repayments.

If a section in the calculator doesn’t apply to you, leave it blank. You can adjust the loan amount, term length and any other variables to help you get an accurate idea of how much you can borrow and what sorts of terms to look for when applying with different lenders.

Bottom line

Business loans for $1 million are easiest to qualify for if you’re an established business with high revenue. Your best bet to get financing is to apply through the CSBFP. You can also apply through your bank or an online lender, though you may end up getting a lower amount than $1 million with these lenders.

Frequently asked questions

• What can I do with a $1 million business loan?

  You can use a $1 million business loan to cover many types of business expenses. Some loans will only let you cover costs to purchase new equipment or real estate. Others will let you use the money you borrow to stock up on inventory, top up your payroll expenses or plan a business trip. It’s up to you to decide what you want to spend your money on unless you take out a loan that has predefined spending requirements in place.

• Can I get a $1 million loan to start a business?

  Probably not. Most startup loans don’t offer $1 million in funding. If you’re a new business, you may want to look into other options such as crowdfunding, angel investors or even startup grants to get the financing you need to start or run your business.

• Can I get a $1 million business loan with bad credit?

  It’s very unlikely. This is because your lender will want to make absolutely sure that you repay a loan as large as $1 million. They will determine your creditworthiness using your annual revenue, the worth of your personal assets and your credit score. You may need to build your credit score up if you want to qualify for a $1 million loan.

• Can I buy a business with a $1 million loan?

  You could, as long as it covers the business acquisition costs. You won’t be able to use a CSBFP loan for this purpose. Some lenders offer financing designed to specifically cover business acquisition costs.