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Large Business Loans: Definition, How to Qualify, & More

Large Business Loans - What They Are & How to Apply for Them
Susan Guillory
Susan GuilloryUpdated October 27, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Many small businesses take out loans to cover day-to-day operating expenses, hire staff, or make a big purchase. And, while there are many loans available in the several thousand to $100,000 range, what can you do if you’re dreaming even bigger? Maybe you want to acquire another business, buy real estate, or get high-dollar equipment for your company. That’s where large business loans come in. Many banks and other lenders offer million-dollar business loans (and even much higher amounts) to help small and medium-sized businesses skyrocket their growth. Wondering if your business might qualify? Here’s what you need to know about large business loans, where to find the best options for your business, and how to apply.

What Is a Large Business Loan?

A large business loan is generally defined as a loan of $500,000 or more.Typically, small business loans, loans backed by the Small Business Administration (SBA), and business lines of credit max out at about $5 million, and financing for purchasing or expanding commercial real estate can offer up to $10 million.Repayment terms for large business loans can extend many years. These types of loans are available from traditional banks, credit unions, and online lenders.

How Do Large Business Loans Work & What Are Their Uses?

You can use a large business loan for many purposes, including:
  • Purchasing commercial real estate to expand your space or open new locations
  • Fulfilling large orders
  • Expanding your product line
  • Buying large assets or equipment
As you might expect, large business loans can be harder to come by than smaller ones. For a business to get a large loan, it typically needs to have a good track record, have been in business for several years (or have experienced explosive growth in a short time), have a good business credit score, and back the loan with collateral. Unlike smaller loans, which often have simple online applications with an instant response on whether you’re approved or not, a large business loan may have a more in-depth application process and approval can take several weeks or months.You may be asked for details on what you plan to use the loan for. In the case of purchasing equipment, for example, you may be asked to specify the model and age of what you’re buying, as well as what you’ll use it for.You may also need to provide financial statements or tax returns to show that you’re fiscally responsible enough to pay back such a large loan. Some lenders, particularly traditional banks, may require you to visit a physical branch to complete the application.Recommended: How to Get a Million Dollar Business Loan

Pros and Cons of Large Business Loans

Should you take out a large business loan? Here's a look at the pros and cons of business loans.
ProsCons
The capital can help grow your business fasterThe larger the loan, the more interest you’ll pay overall
If you qualify for low rates, the financing may be affordableThe application process may take months

Pros

If you have big plans for your business, you might not have a way to fund those plans on your own. Maybe you want to acquire another business that’s asking $1 million as the purchase price. You know it’s a great value, but you don’t have the capital. A large business loan can make that happen.The better your credit and financial history, the lower the rate you’ll pay. Also, the longer the loan term, the lower your payments will be, and most large business loans have long repayment periods. Keep in mind, though, that longer terms mean you’ll pay more in interest over the life of the loan.If your business doesn’t see consistent revenue from one month to the next, having a large amount of cash can ensure you have steady access to working capital when you need it.

Cons

Like any financing, you’ll pay interest on a large business loan. And the larger the loan, the more interest you’ll pay in total.If you’re in a hurry to get financing, a large business loan may not be right for you because it typically takes time for your application to be processed.While having a large lump sum of cash can be appealing, you have to be able to pay it back. A large loan payment each month could strain your budget.

Where Can You Find Large Business Loans?

As you start your research on how to get a large business loan, you can look to banks, credit unions, and online lenders. The Small Business Administration (SBA) has several loan programs with high caps to consider, as well.It can be a good idea to start your quest with the bank you already have a business relationship with. However, you don’t necessarily want to stop there. Comparison shopping different business loan options could potentially help you find a better rate and terms.Recommended: Guide to How Big of a Business Loan You Can Get

Qualifying for Large Business Loans

The qualification requirements for a large business loan may be more stringent than for a $5,000 loan because there is much more risk to a lender. For a large business loan, you may need to have:A proven track record: To approve a large loan, lenders often want to make sure that a business has been operating for at least a couple of years. Generally, the more experience you can show, the better.Large revenue: Companies that qualify for large business loans tend to have very strong revenue to show potential lenders.Strong credit scores: Good scores show lenders that you have a history of paying your personal and business debts on time. This gives a lender confidence that you’ll end up paying back a large business loan fully and on time.Sufficient collateral: Having business collateral can make it easier to qualify for a large business loan. It lets the lender know that even if you should default on your loan, they could still get their money back by seizing the assets you put up as collateral.

Types of Large Business Loans

There are many different types of business loans to explore when you’re looking to borrow high dollar amounts. Here are a few to consider.

SBA Loans

SBA loans are issued by traditional bank lenders but guaranteed by the Small Business Administration. With SBA-backed loans, such as the 7(a) and 504 loan programs, you can borrow up to $5 million.SBA loans typically offer the best rates, along with term lengths of 10 to 25 years. These loans can be used for a wide variety of business purposes — from purchasing a new business to covering working capital needs.
ProsCons
The capital can help grow your business fasterThe larger the loan, the more interest you’ll pay overall
If you qualify for low rates, the financing may be affordableThe application process may take months

Commercial Real Estate Loans

Commercial real estate loans help businesses purchase commercial property, such as an office building, hotel, or retail space. They are available from private lenders, banks, and the SBA. Just like getting a mortgage to buy a home, commercial real estate loans typically come with long repayment terms and are secured by the property being purchased. 
ProsCons
Can be used to purchase real estate, constructing or renovating facilities, landscaping, adding parking lots, and moreLimited to commercial real estate-related expenses

Secured Business Loans

Secured business loans are loans that are backed by collateral. This means that, should you be unable to pay off your loan, the lender has the right to seize that asset to cover your debt. Examples of collateral include real estate, equipment, and inventory. You may or may not also need to make a down payment on the loan. 
ProsCons
Tend to have lower interest rates than unsecured loansIf you default on the loan, you could lose valuable assets

Accounts Receivable Financing

Another option for getting the cash you need is accounts receivable financing. This type of financing allows you to borrow against the value of your unpaid invoices. Accounts receivable financing gives businesses a way to get early payment on outstanding invoices and purchase orders. If payments are delayed, the business still has the funding it needs to continue operations. Then when payments come through, customers pay the lender directly.Since the loan is secured by your invoices — money your business has already made — the risk tends to be lower for both you and the lender. You can often find AR financing products from online lenders.
ProsCons
Typically does not require additional collateral beyond your unpaid invoicesYou need good credit and qualified invoices to get this type of financing

Franchise Loans

If you plan to purchase a franchise or already operate one that could use an infusion of cash, franchise loans may be worth considering.
ProsCons
Can be used to purchase a franchise or make renovations to an existing oneFranchisor may require you to use one particular lender, which limits your options

Business Lines of Credit

If you don’t plan to use a large business loan all at once, a business line of credit may be a better option than a loan. Similar to a credit card, a business line of credit allows you to borrow up to a set limit and gives you access to funds as you need them. You pay interest only on the amount you borrow.
ProsCons
Can be used for any purposeGenerally available in smaller amounts than business loans

How to Get a Large Business Loan

Large business loans tend to have more hoops to jump through in the application process. You may be required to provide tax statements, financial documents, and even a business plan. Plus, many lenders will want particulars on how you will use the funds, and may also ask about assets you can use as collateral.Below is what you may need to submit to get a large business loan.

Personal & Business Information

With many lenders, you can fill out an online application. To get started, you’ll likely need to provide: 
  • Your name, phone number, email, and social security number
  • Business name, address, and EIN
  • Business industry

Time in Business

Lenders will want to know how long you’ve been in business for. Most lenders want to see at least six months of business history for many small business loan products. For larger business loans, they may want to see a few years of business history.

Credit Score

To qualify for a large business loan, lenders like to see a credit score of 680 or higher. Because the lender is loaning such a large amount of money, they want to make sure you’ll be able to pay them back. Also, the stronger your score, the better the rate you’ll receive.

Annual Revenue

Businesses who want a large business loan need to be bringing in high annual revenues. Most lenders want to see at least $350,000 annually, but some may prefer even more depending on the amount you want to borrow, your business history, and your credit score.

Intended Use of Loan

When you apply for a large business loan, lenders will want to see a detailed business plan and what you plan on using the loan for. If you’re using it to purchase a second location, for example, this gives the lender more security knowing that if you default, they can seize the property.

Desired Loan Amount

How much you want to borrow factors into your application. The more you hope to receive, the more stringent the lender’s requirements will be. If you need a large business loan of $500,000 or more, expect to have good credit scores, a few years of business history, and high annual revenues.

Collateral

Most large business loan lenders will want you to put up collateral before qualifying you for the loan. Collateral can include property, equipment, machinery, vehicles, accounts receivables, and investments.Larger loans tend to take longer to process than small loans, so it may be weeks before you get a response from the lender, particularly for bank and SBA loans. Once you’re approved, you will need to review the loan agreement, which will tell you how much you have been approved for and the repayment terms.Once you sign the agreement, the funds can often be deposited into your bank account in as little as one business day.Recommended: Applying for a Small Business Loan in 6 Steps 

Alternatives to Large Business Loans

If you don’t qualify for any of the loan options above, you have a few other options.

Peer-to-Peer Lending

Rather than going through a bank to be approved for a loan, you can also borrow money through peer-to-peer lending. This is a situation where private individuals, rather than banks or online lenders, loan money to businesses.There are websites specializing in connecting private investors with companies seeking financing. Rates may be higher than with traditional loans, but you may find these loans easier to qualify for.

Venture Capital

If you run a startup and are willing to give up equity to investors in exchange for capital, venture capital is an option. Sometimes investors bring more than money to the table, as they may have useful industry contacts and advice to help your business grow.

Crowdfunding

Crowdfunding allows you to create a campaign online to raise funds for a particular purpose, such as launching a new product line. Anyone who finds your campaign interesting can donate. Typically, these funds do not have to be repaid.Some crowdfunding sites require you to give a gift to contributors, such as your product, a t-shirt, or a personal experience with your brand.

The Takeaway

When the time comes for your business to expand, buy new equipment, or fill an unusually large order, you might find yourself in need of a big infusion of cash that you simply don’t have. That’s where a large business loan might come into play.Understandably, large business loans can be harder to come by than small ones. For a business to get a large loan, it often needs to have a good track record, have been in business for several years (or have experienced explosive growth in a short time), have a good credit score, and more than likely use collateral to secure the loan.If you’re thinking of applying for a large business loan, consider Lantern by SoFi. Lantern allows you to compare multiple business lenders all in one spot. With just a single application, you’ll receive an offer from one of our top lenders, all with no obligation to you.

Frequently Asked Questions

How big can a business loan be?
What is considered a large business loan?
How hard is it to get a 1 million dollar business loan?
Can you get a large business loan with no collateral?
Where can large business loans be found?
Photo credit: iStock/Kerkez
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About the Author

Susan Guillory

Susan Guillory

Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
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