Can I Get a $4 Million Business Loan?
Can you get a $4 million business loan, and what are the requirements for it? Explore your options.
Growth opportunities don’t come around every day. When you’re faced with one, it’s best to take advantage of the situation immediately to avoid missing out, especially if you’re in a competitive industry.
But, as you know, every opportunity comes at a cost. Some entrepreneurs see a high price tag and choose to wait for the next opportunity to come along. Other, more savvy entrepreneurs will leverage their financing options to afford the cost, leaving all the other individuals who chose to wait in the metaphorical dust.
Regardless of the cost of the opportunity ahead of you, a business loan can help you get where you need to be. Continue reading for everything you need to know about getting a $4 million business loan to support your growth.
$4 Million Business Loan Qualifications
1 Year in Business
$500,000 in Annual Revenue
No Minimum Credit Score
Advantages of Acquiring a $4 Million Business Loan
Every business reaches a stage where the investments that brought them to where they are today aren’t enough to propel operations to the next level. The most successful entrepreneurs know when to switch gears and invest in alternate revenue-driving opportunities, but even this group is missing an important piece of their plan – money.
Business financing is often the solution. Instead of waiting for profits to support their growth plan, entrepreneurs can quickly invest in their business and repay what they’ve borrowed over a manageable schedule. Here are a few of the many advantages:
- Instant liquidity
- Streamlined cash flow
- Increased purchasing power
- Ability to spread the cost of major investments over time
- Variety of financing structures to choose from
- Tax benefits on certain types of financing
However, this isn’t something you should approach without a strategy. To maximize the benefits, you need to ensure your financing aligns with your business and where it’s headed.
Where Can I Find a $4 Million Business Loan?
Banks, credit unions, non-bank lenders, and marketplaces* offer business financing. Here’s a breakdown of each type of lender.
| Type of Lender | Description |
| Banks and Credit Unions | Banks and credit unions are characterized by low interest rates, slow funding times, numerous industry restrictions, and inflated eligibility requirements (2+ years in business, $250,000+ in annual revenue, and a 720+ FICO). |
| Non-Bank Lenders | Non-bank lenders are essentially the opposite of banks and credit unions. They feature fast funding times, little-to-no industry restrictions, less intensive eligibility criteria, and higher interest rates. |
| Marketplaces | Marketplaces combine multiple non-bank options into one centralized platform, allowing business owners to apply once and receive multiple offers. This option is best suited for entrepreneurs who can’t afford to take time away from their business to research and compare their financing options
*Marketplaces don’t fund businesses themselves; Instead, they learn about a business and apply them to the lenders most likely to extend a competitive offer. |
How Much Will a $4 Million Business Loan Cost?
The price you’ll pay for financing a $4 million business loan will depend on various factors, including:
- The lender you’re dealing with
- The financial information of your business
- The type of loan you’ve secured
- The length of your repayment terms
- How long you’ve operated in your industry
- The Fed’s current interest rates
$4 million is a significant amount for a lender to offer, so expect to have your business’s information carefully reviewed during your application process.
They’ll need to fully understand the capabilities of your operation to ensure you’re able to pay back the loan within the terms.
Generally, repayment terms for a $4 million business loan vary between 7 and 25 years, and interest rates fall between 7% and 15% APR, depending on your lender.
Think of it like this: The stronger your business’s financials are, the less you’ll have to pay to secure financing.
Businesses with lower credit scores can still secure a $4 million business loan, but they’ll likely have to pay higher interest rates and offer collateral to secure the loan with the lender.
The repayment terms of your loan will also factor into your total cost, as longer repayment terms tend to feature higher interest rates.
However, while you might think you’re saving money by choosing shorter repayment terms, your monthly payments will be significantly higher, which might overextend the capability of your operation.
$4 million loan options exist for almost any business challenge. Each one has advantages and drawbacks that can make one option more beneficial for your operation than another, so it’s best to review your options before making a final decision.
Who Needs a $4 Million Business Loan?
The actions you’ve taken to bring your business to where it is today often aren’t the same ones you’ll need to take your business to the next level. As you grow, opportunities and challenges will cost more.
Businesses on the verge of reaching new milestones need resources outside of their cash flow to invest in their operations. Here are a few examples of businesses that can leverage business financing to attain their goals.
- A popular restaurant that reaches capacity frequently, causing them to lose/turn away customers. With funding, they can expand their dining area, invest in outdoor dining, or open a new location.
- A construction company looking to invest in technology, new equipment, and additional workers to take on more jobs.
- A rapidly growing apparel manufacturer that has an opportunity to purchase bulk inventory at a discount.
- A technology company dealing with slow receivables, preventing them from starting new projects.
These are just a few of the many situations where business financing can accelerate a business’s growth. If you have a question about how financing will help your specific opportunity or challenge, reach out to the experts at National Business Capital for more information.
What Are the Uses of a $4 Million Business Loan?
$4 million in borrowed funds can be used for any business purpose, although it’s best to invest them in revenue-driving opportunities. Here are a few ways successful entrepreneurs have leveraged financing to grow their businesses.
- Purchase bulk inventory
- Support expansions, whether physical or online
- Buy/upgrade equipment
- Hire/train workers
- Invest in marketing campaigns
- Redesign websites
- Bridge receiveable gaps
- Purchase a new business
- Buy out partners
Think about how you would invest $4 million in your specific circumstances. Would you solve persistent challenges that drain your cash flow or make significant investments to diversify/strengthen your revenue? In either case, business financing can yield the cash you need to accomplish your goals.
Five Types of $4 Million Business Loans
Here are five of the most common financing options available to entrepreneurs seeking $4 million to grow their business:
| Type of Financing | Description |
| Business Term Loans | Business term loans are given in a one-time lump sum payment that you must repay within the terms outlined by your lender.
The interest rate for term loans usually depends on the repayment terms, generally between 7 and 25 years, but other factors will also play a role, such as the lender you’re doing business with. Entrepreneurs tend to seek out term loans when they know exactly how much a project will cost, like a real estate or equipment purchase. However, many lenders will require a detailed plan of how you intend to use the borrowed funds before approving you for a term loan, so make sure to factor that into your plan before making a final decision. |
| Business Line of Credit | A business line of credit is one of the most flexible financing options available. They feature a revolving line of credit, which you can draw on whenever you need capital. Unlike a business credit card, you can draw physical cash with a line of credit, allowing you to use this option for working capital purposes, amongst other needs.
When you repay the borrowed amount on your line, you can draw the same funds again and stay ahead of any challenges your business may face. While this won’t offer too much help with your $4 million needs, you can secure a business line of credit along with another financing option to help manage the day-to-day of your business while you repay the other loan. |
| SBA 7(a) Loans | A SBA 7(a) loan might be the best option for business owners seeking to secure a $4 million business loan. With a maximum borrowing amount of $5 million, this option can be used to solve the most expensive challenges and, of course, help you grow your operation and outpace your competition.
SBA 7(a) loans also feature some of the lowest interest rates because the government partially guarantees a portion of the funds, between 75% and 85%. The added layer of security lets lenders offer lower interest rates, as they know they’ll receive a majority of the borrowed amount if you default. Despite the benefits of SBA loans, the eligibility requirements are strict, and the underwriting process takes some time to complete. Businesses with lower credit scores may not qualify for this option, but that doesn’t mean you shouldn’t apply and explore your options. |
| Accounts Receivable Financing | Accounts receivable financing is used to turn late customer payments into immediate liquidity. If you’re looking to secure $4 million in capital through A/R financing, the value of your current receivables will need to exceed $4 million.
This is because the lender will require a portion of your accounts receivable as payment for the financing, usually between 5% and 15%. You can either “sell” your invoices through factoring or, if you prefer, leverage their value as collateral for a different type of financing. |
| Revenue-Based Financing | Revenue-based financing is similar to term loans in that it provides a lump sum of business funding, but there are a few small differences that make it unique. First of all, revenue-based financing isn’t a loan. Instead of an interest rate, there’s a factor rate (usually between 1.1 and 1.7) that’s multiplied by your funding amount to determine your cost of capital.
You repay the borrowed amount through small deductions from your daily sales, which correlate to your profitability. Although it’s primarily a short term solution, revenue-based financing is a powerful resource for growing businesses. |
What Are the Requirements for a $4 Million Business Loan?
A $4 million business loan is on the higher side of the financing spectrum, but that doesn’t mean you can’t secure one with favorable terms that allow your business to grow without restriction.
However, your ability to reach approval with these favorable terms will depend on the lender you’re dealing with and your business’s financial information.
Banks and credit unions, otherwise called “traditional lenders,” tend to offer low interest rates but carry strict eligibility guidelines.
If you’re working with a bank or credit union, at a minimum, you’ll have to provide the following information if you want to get a $4 million business loan:
- Business credit score (700 or more)
- Personal credit score (700 or more)
- Bank statements (going back at least one year)
- Business plan (including information on your industry, competitors, growth strategy, etc.)
- Business history (at least 3 years)
- Cash flow
- Collateral
- Entity type
- Profit margins
- Revenue levels
- Collateral is often needed for a loan of this size, as the lender needs a way to minimize their risk if you default on the loan. If you do, the lender can seize the collateralized asset as a method of recouping a portion of the borrowed amount.
You can offer any asset you own of value to secure the financing, such as real estate, vehicles, or other valuable equipment.
You aren’t forced to finance with a traditional lender; There are many different lending organizations that might be able to finance your business growth.
Online and fintech lenders will have looser restrictions but usually will carry higher interest rates, and they might require you to offer collateral to secure the financing. However, they also work at a much faster rate compared to banks and credit unions. In some cases, you can reach approval and receive your borrowed capital within days of submitting your application.
Compare $4 Million Business Loans Through National Business Capital
A $4 million business loan isn’t something you can secure in one day; You’ll likely have to take time out of your busy schedule to compare lenders and their programs.
Not to mention the process of physically applying for the loan, which is often longer if you’re dealing with a traditional lender who hasn’t updated their application in years.
Rather than take your focus away from running your business, you can team up with a marketplace of lenders, like National, to find competitive options for your business’s growth.
National’s award-winning team takes the guesswork out of securing best-fit loan solutions. Our Business Finance Advisors take the time to learn about you, your business, and the challenges you face to connect you with a lender that offers favorable terms for your operation. Our process is streamlined, our team genuinely cares, and we’re there for you after the deal is funded. Can it get any better than that?
Ready to secure a $4 million business loan to kickstart your growth? Complete our digital application in minutes and take the first steps along your financing journey. Click here to get started!
What About a $5 Million Business Loan?
Hear the information you’re searching for directly from the source—Joseph Camberato, CEO & Founder of National, on his channel, “Grow By Joe.”
FAQs
Is It Possible to Get a 3 Million Dollar Business Loan?
Yes! There are various financing options that you can choose from to secure a $3 million business loan. One of which is the SBA 7(a) loan, which features a maximum borrowing limit of $5 million and competitive interest rates.
Banks, credit unions, and online lenders may also offer $3 million business loan options, but they’ll likely carry higher interest rates or require you to offer an asset as collateral.
How Can I Get a 2 Million Dollar Business Loan?
To get a 2 million dollar business loan, you’ll likely have to have a solid credit score, a lengthy time in business, and generate substantial revenue on a monthly basis to qualify for a $2 million business loan.
If you have lower credit, you can potentially still secure $2 million in financing for your business, but you’ll have to pay higher interest rates as a result.
Additionally, you’ll need to find a lender offering a loan of this size, like the SBA, which offers maximum borrowing limits of $5 million through their SBA 7(a) program.
What’s the Largest Small Business Loan You Can Get?
Through the SBA 7(a) program, you can secure up to $5 million in financing for your business. Other lenders may offer loan amounts of this size, but they’ll likely enforce higher interest rates compared to the 7(a) program, which features some of the lowest interest rates on the market.
Do Banks Give Million Dollar Loans?
Banks and credit unions offer loan amounts of $1 million+, but they aren’t the only avenue to secure financing of this size. Online and fintech lenders have become popular options for entrepreneurs seeking to secure capital for their businesses.
While they may not offer interest rates as low as banks and credit unions, their application process is faster, and they have various financing options for you to choose from as you grow your business and outpace your competition.
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