How to Get a $1 Million Business Loan: The Ultimate Guide

1. Assess Your Financing Needs

Good cash flow management will take care of day-to-day operations, but a large amount of capital can go a long way when it comes to scaling your business. Consider the investments and assets that take your business to the next level.

With a seven-figure loan, you can:

• Renovate and/or expand into new locations
• Purchase equipment and technology
• Build an emergency fund
• Invest in marketing campaigns
• Buy inventory in bulk

Before applying for a loan, assess what revenue-driving factors you need in different areas of your business. This way, you can determine how much funding you need and plan how to use the loan.

2. Compare Lenders

There’s not a one-size-fits-all approach when choosing a lender. It’s important to research and identify lenders who provide large business loans and have a history of working with businesses in your industry.

Small businesses typically have two main choices of lenders: traditional banks and alternative lenders. Let’s look at their differences to determine which best suits your business.

Traditional Lenders

Banks and credit unions are known as the traditional “go-to” lenders, with most having local brick-and-mortar branches in your town. In addition to business loans, these financial institutions offer a wide range of financing products, such as business credit cards and merchant services, as well as discounts within their programs.

You can expect banks and credit union loans to have lower annual percentage rates (APRs) and flexible repayment terms. As for drawbacks, traditional lenders tend to have strict lending requirements, such as excellent credit scores and high annual revenue. They also charge various fees and have a lengthy loan application process.

Alternative Lenders

Outside of banks and credit unions, there are online and private financial institutions. These alternative lenders generally work with small businesses, especially those turned down by banks, and offer simpler loan applications entirely online. They also have more flexible borrowing criteria than banks, such as fair credit scores.

You can expect alternative lenders, especially online lenders, to have a more streamlined application process and quicker disbursement of funds. The only downside is higher interest rates since alternative lenders are generally taking on more risk.

3. Determine Your Eligibility

Before approaching lenders, thoroughly assess your borrowing eligibility. Understand that a $1 million business loan will most likely have more stringent borrowing criteria. While application requirements vary by the lender, most lenders review the following factors:

• Credit score: At least 550
• Time in business: At least six months
• Annual revenue: Over $120,000

If your business doesn’t meet this criteria yet, it’s still possible to qualify for a million-dollar loan. This is where strategic planning enters.

Ways to Boost Your Chances of Approval

A strong credit profile can significantly enhance your loan approval odds. You’ll want to address any outstanding issues on your credit report, pay off existing debt, and make on-time payments to other loans to boost your credit score.

Additionally, offering a personal guarantee or collateral — high-value equipment and business assets — can significantly increase your chances of loan approval. Since many lenders already require collateral to mitigate the financial risk, offering it to one who doesn’t can make you a favorable borrower.

Apply for $1M Business Loan

4. Prepare Your Business Documentation

The process of applying for a business loan will vary depending on the lender, but most of them still require a significant amount of documentation, especially to get approved for $1 million. You’ll most likely need to gather:

• Credit reports (both personal and business)
• Tax returns (both personal and business)
• Business bank statements
• Balance sheets or accounts receivable
• A solid business plan detailing your growth strategies and financial projections
• Any applicable business licenses, certifications, and registrations

5. Apply and Submit Your Application

After gathering all of the necessary paperwork, you can complete the loan application. Some lenders allow you to submit everything online, but some traditional lenders, such as banks, may require you to visit a local branch in person.

After submission, you’re officially in the waiting period. While waiting for approval can take up to a few weeks for traditional lenders, most online lenders can guarantee loan approval within a few business days.

Once approved, your lender will send you the loan agreement to review, outlining the total amount, your interest rate, monthly payment, and any additional fees. After signing the agreement, your lender will disburse the loan.

Types of $1 Million Business Loans

Several types of business loans have limits over $1 million. Depending on your eligibility, here are a few from which you can choose:

SBA 7(a) Loan

A government-backed loan offers up to $5 million. 7(a) loans tend to provide more favorable terms and lower interest rates for business owners seeking substantial funding, generally those with a 640 or higher credit score.

• Apply for SBA Loan

Working Capital

A type of short-term financing loan of up to $5 million that businesses can take out to cover daily operating expenses, cash flow gaps, and more. This loan is easily accessible for businesses of different sizes and types, where your credit score determines your interest rate.

• Apply for Working Capital

Business Line of Credit

A revolving credit line with a preapproved limit of up to $5 million, high approval rates, and no prepayment penalties. With lines of credit, you only pay interest on the amount you borrow.

• Apply for Line of Credit

Equipment Financing

An asset-based loan of up to 100% of the equipment or asset’s value, which can cost millions. This financing option is good to utilize if you have quality assets to leverage.

• Apply for Equipment Financing

Term Loan

A traditional loan that you can borrow up to $5 million with up to two years of repayment if short-term. Eligibility is purely based on your cash flow, such as having six months of bank statements to prove substantial revenue.

• Apply for Short-Term Loan

Frequently Asked Questions

Secure Up to $5 Million Through Clarify Capital

It can take a lot of time and planning to secure $1 million in financing. Fortunately, with the right lender, you can avoid jumping through hoops.

Clarify Capital has more lenient eligibility for small businesses and faster approval. We team with our 75+ network of lenders to secure the best loan option for your industry and business needs.