A $3 million business loan can be difficult to find – and even more difficult to qualify for. To borrow such a high amount of money, you’ll typically need to turn to a big bank or a lender specializing in high-dollar financing, have strong personal credit and have a high revenue to be able to afford five-digit monthly repayments.
Where can I get a $3 million business loan?
Most online lenders won’t offer loans in such high amounts. To get a $3 million business loan, you’ll likely need to turn to a large bank or a lender that specializes in high-dollar financing for businesses.
The type of financing that you’re looking for can also play a role in the type of lender that you turn to for financing. If you’re looking for a term loan, again a bank or lender specializing in high amounts would likely be your best options. Businesses that rely on invoices from other companies may find a factoring lender useful, while retailers might be able to qualify for funding from a merchant cash advance company.
How can I qualify for a $3 million business loan
Eligibility requirements vary by lender and the type of financing you’re interested in. If you’re interested in a $3 million business loan, you’ll likely need to meet the following criteria:
Strong personal credit of 650 or higher.
Established business with years of experience.
Strong business financials to afford repayments.
Consistent cash flow.
Annual revenue well into the millions.
Collateral to back the loan.
Established relationship with the lender.
How much will a $3 million business loan cost?
It depends on your business and the type of financing you choose. Loans of this size typically come with relatively low rates and long terms — think APRs between 4% and 10% and loan terms ranging from 3 to 25 years.
As an example, if you took out a $3 million loan at a 9% APR with a 10-year term, you would have monthly repayments of $38,002.73 and pay a total of $1,560,327.86 in interest over the life of the loan.
Let’s take a look at an example …
Eric owns an online retail business and needs $3 million to expand his operations into a new office space. He decides to go with a standard business term loan, since he has several miscellaneous expenses and enough assets to provide collateral.
He turns to an online lender specializing in high-dollar financing. Here’s how his offer breaks down:
Interest rate: 7.75%
Term: 20 years
Taking the rate and term into account, loan repayments will be $24,628.46 a month and he’ll pay a total of$2,910,829.66 in interest over the life of the loan.
Business loan calculator
This calculator allows you to input details of 2 loans to compare the full cost of each. Compare interest and fees, and calculate the fixed, ongoing and total cost of repaying the loan.
After you’ve entered the details of your loan options, the calculator shows you the cost of monthly repayments and the total amount you’ll pay back in principal and interest. If you decide to compare 2 loans, you’ll see the lender that costs less over the term you choose.
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:
Loan term and amount. Select how long you need to repay the loan and enter the amount you intend to borrow.
Bank name. Enter the names of your lenders.
Fixed rate and period. If your loan comes with a special introductory fixed rate, enter the rate and how long the intro period lasts.
Ongoing rate. Enter the ongoing rate you’ll pay for your loan here.
Upfront fees. If your loan has an origination or application fee, add it here.
Fees. If the loan comes with any ongoing fees, you’ll need to add them here and select how often they’re charged.
Prepayment penalty. If you’re charged a prepayment penalty for paying off your loan early, enter the amount here.
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.
Compare business loans to meet part of your financing needs
The lenders below may not offer business financing up to $3 million. However, you may still be able to get part of the funds you need to cover some of your most important upfront costs. Compare lenders offering business loans of up to hundreds of thousands of dollars.
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4 types of $3 million business loans
You have several types of financing to choose from when looking to borrow $3 million — though not all are right for every business.
1. Business term loan
A business term loan comes in one lump sum, which you repay over a period of 5 to 25 years, plus interest and fees. Term loans of $3,000,000 might be available through large banks or online lenders that specialize in high-dollar financing.
You generally need to have near-perfect credit and high monthly revenue to qualify for a $3 million term loan. It also helps to have a good relationship with the lender you’re applying with. Collateral is also usually required for a loan of this size.
Consider using a term loan if …
You need to fund a one-time expense.
You and your business partners have excellent personal credit.
A line of credit makes sense when you have an ongoing project you need to fund, like construction or expansion. Rather than borrowing $3 million all at once, you get access to a credit limit up to $3 million – which you can draw from as needed. You only have to pay interest on the amount you actually borrow.
The same types of lenders that offer term loans also usually offer lines of credit of this amount. Similar eligibility requirements also apply.
Consider using a line of credit if …
You have costs that are unpredictable.
You and your business partners have strong personal credit.
You have enough collateral to back a $3-million credit line.
Retailers can get an advance on their future sales through this high-cost alternative to traditional business loans. Generally, merchant cash advances have less stringent eligibility requirements and a much faster turnaround — think a few days, rather than weeks.
Instead of interest, these come with a flat fee that you repay with a percentage of your company’s sales. However, these can be significantly more expensive than traditional financing.
Consider using a merchant cash advance if …
You own a retail business.
You’ve struggled to get financing elsewhere.
You don’t have the time to spend on a lengthy application.
Consider other options if …
You’re not in the retail industry.
You can qualify for a term loan or line of credit.
You have the time to spend on a more detailed application.
Similar to a merchant cash advance, this option offers an advance on your business’s unpaid invoices from other companies or government agencies. It involves selling your unpaid invoices at a discount to a third party. You typically receive around 80% to 95% of the unpaid amount upfront and get the remaining amount after your clients have paid.
Invoice factoring is typically fast, and you can qualify without revenue or excellent credit. However, it’s also expensive compared to other options.
Consider invoice factoring if …
Your business has at least $3.5 million in unpaid invoices.
You need money quickly.
You’ve struggled to qualify for other types of financing.
Consider other options if …
Your business has less than $3.5 million in unpaid invoices.
You have time to spend on lengthier applications.
Your business can qualify for a term loan or line of credit.
Compare business bank accounts
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Bottom line
Your choices are limited if you need a $3 million business loan to help your enterprise succeed. Most online lenders are off the table, as are many small banks and credit unions – but you may be able to secure such a large amount of financing from a big bank or a lender specializing in large loans for small businesses. If you have strong financials, established operations and an excellent credit score, you stand a better chance of being approved for a loan of this size.
The easiest way to calculate the monthly repayment and total interest cost is to use a business loan calculator — there’s less room for error. However, most lenders will break down your loan costs in the offer they send you.
It’s possible if you have a consistent five- or six- digit monthly revenue stream, an established business and a near-perfect personal credit score. Most lenders require all business owners to make a personal guarantee on the loan, where you agree to cover the repayments yourself if your business falls through.
First, think about what you need the funds for and what your priorities are. Use this information to decide on the type of loan and lender that makes the most sense. Then, compare lenders you can qualify with to narrow down your choices and find one that best meets your needs.
Anna Serio is a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
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