Business loans in amounts as high as $5 million can be difficult to qualify for – and difficult to find. That’s because lenders take on a huge amount of risk offering up such a large amount of money. To borrow such a high amount, 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 enough revenue to be able to afford five-digit monthly repayments.
Where can I get a $5 million business loan?
To get a $5 million business loan, you’d 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 $5 million business loan?
Eligibility requirements vary by lender and the type of financing you’re interested in. If you’re interested in a $5 million business loan, you’ll likely need to meet the following criteria:
Strong personal credit of 700 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 $5 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, a $5 million loan with a 25-year term at an interest rate of 10% would cost $45, 435.04 a month.
Let’s take a look at an example …
Spencer owns a campus bookstore called Bookends. The business was doing well enough that he decided to open a second location in the area. But real estate in such a prime location wasn’t cheap, and he needed to take out a $5 million business loan to cover the cost.
After narrowing down his options, Spencer decided to apply for a business term loan that allows him to use the money toward buying real estate.
He applied and qualified for a $5 million loan with the following rates and terms:
Interest rate: 7.5%
Loan term: 25 years
Taking the rate and term into account, monthly loan repayments will be $36,949.56 a month — with a total of $6,084,867.67 paid in interest over the life of the loan.
Business loan calculator
Use this business loan calculator to find out how much your monthly payments could cost.
You have several types of financing to choose from when looking to borrow $5 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 $5,000,000 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 $5 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.
You have a good relationship with your lender.
Consider other options if …
It’s hard to predict your business’s costs.
You have weak or poor credit.
Your business lacks sufficient collateral.
2. Business line of credit
A line of credit makes sense when you have an ongoing project you need to fund, like construction or expansion. Rather than borrowing $5 million all at once, you get access to a credit limit up to $5 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 $5-million credit line.
Consider other options if…
You don’t have enough collateral.
You only need funds for a one-time project.
You or another business partner have poor credit.
3. Merchant cash advance
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.
4. Invoice factoring
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 $5.5 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 $5.5 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 loans
We don’t currently have any lenders offering up to $5 million in business financing. However, you can compare lenders offering business loans up to $500,000 in the table below.
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Compare business bank accounts
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Bottom line
It’s a challenge to qualify for $5 million in business funding — many lenders don’t even offer loans this high. But there are still options for businesses with strong financials and established operations. You and your business will likely need to be financially sound and have the collateral to back the loan to qualify.
It depends on your business, your personal finances and the lender. Generally, it’s hard to find a business loan above $1.25 million, though some banks are willing to offer higher sums to larger businesses that have the collateral to back it.
Probably not. Most lenders that offer funding of this size require your business to be around for at least a few years and have a consistent and high annual revenue. Head to our guide to startup business loans to find out about possible funding options for your new business.
Probably not. You’d have a hard time finding a lender willing to offer a $5 million personal loan. Most personal loans max out around $35,000 – $50,000.
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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