$6 Million Business Loan Options in 2023

First, you’ll need to have your financial information in order. Lenders will need to review your credit score, business bank statements, and other documents to ensure you’re capable of repaying the borrowed amount within the term. At a minimum, you’ll need to provide:

• 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

You can choose a few different routes to secure your business loan, but the most traditional options are banks and credit unions. These lenders have been around forever, and before the last few decades, they were the only institutions that would finance small businesses. 

Banks and credit unions tend to have the strictest eligibility requirements of all lending institutions. You’ll need to have a high credit score, a lengthy time in business, and substantial annual revenue to qualify for the most favorable rates and terms, but even businesses with lesser financial information can still reach approval.

However, these lenders aren’t your only option. Alternative lenders, otherwise known as online lenders, can help you secure a large business loan. They have less restrictive eligibility criteria, more flexibility in terms of financing options, and are easier to apply for, but they also feature some of the highest interest rates. 

Higher interest rates might seem like a significant hurdle to growing your business, but you have to look at the bigger picture. Think about the capabilities of your business after you’ve used the borrowed funds to grow: Will you double/triple your revenue? If so, the higher interest rate might not play as big of a role as you thought.

The businesses that can display the strongest financials often receive the most favorable rates and terms. Other businesses can still secure the capital they need to grow, but it might be a bit more difficult to find a lender.

You’ll need options, so make sure to hit the ground running and do the necessary research. By doing so, you can find a lender with terms that fit your needs and, most importantly, grow your business without restriction.

One way that businesses can receive better rates and terms is by offering a valuable asset as collateral. This acts as a method of “securing” the loan and gives the lender an extra guarantee that you’re committed to repaying the borrowed amount.

You can offer a variety of assets as collateral, including real estate, equipment, or vehicles. 

Many entrepreneurs try to avoid offering collateral because they don’t want to risk losing a critical asset if they end up defaulting on their payments. It’s a valid concern, but if you’re on top of your payments and running your business, you likely won’t find it difficult to pay back the borrowed amount within the term.

Growing a business requires money – and a lot of it. When cash flow can’t support growth plans, entrepreneurs turn to business financing to secure the funds they need to take advantage of opportunities and solve challenges.

Here are a few advantages of $6 million business loans for growing businesses.

• Greater purchasing power
• Instant liquidity
• Streamlined cash flow
• Wide variety of financing structures to receive your funds
• Ability to spread expenses over a longer schedule
• Tax advantages for some financing products

You’ll always be faced with opportunities and challenges outside of your price range. The difference between the biggest businesses and those that have stayed stagnant is their dedication to taking advantage of these opportunities, regardless of the price tag.

You can secure business loans from banks, credit unions, non-bank lenders, and marketplaces.

Banks and Credit Unions

Banks and credit unions are “traditional lenders.” They offer standard financing options to businesses that can meet their rigid eligibility criteria (2+ years in business, $250,000+ in annual revenue, and a 720+ FICO). While they can offer low interest rates, the slow speed of their process deters many businesses from working with them.

Non-Bank Lenders

Non-bank lenders feature faster funding times, a wider range of financing options, lower eligibility requirements, and higher interest rates than banks and credit unions. Although the cost of capital is higher, many entrepreneurs choose non-bank lenders because of the speed of their process.

Marketplaces

Financing marketplaces combine multiple non-bank lending options into one singular platform, reducing the time and effort required to explore your options. These organizations are best for entrepreneurs who want to quickly and easily explore the non-bank options they qualify for without filling out a ton of paperwork.

The price you’ll pay on your 6 million dollar business loan will depend on various factors, including

• Your business’s financial information
• The type of loan you secure
• The length of your repayment terms
• How long you’ve been in business
• The lender you’re doing business with
• The current FED interest rates

Interest rates generally fall between 7% and 15% APR, and repayment terms for a $6 million business loan are usually between 7 and 25 years. The specific rate you pay, however, will depend on the factors above.

You might think that opting for shorter repayment periods will save money in the long run. While it may lower the amount you pay in interest, you should be careful not to overwhelm the capabilities of your business. 

Shorter repayment periods mean higher monthly payments, and if you can’t handle them, it’s easy to lose your grip and find yourself in a situation where you’re struggling to repay your loan.

You’ll need to speak with multiple lenders to ensure you’re getting the best deal, even if you boast strong financial information. There’s always a better deal out there; You just need to find it

Make sure you have everything in order before you speak to lenders to avoid wasting time. You’ll need all your relevant financial information, and you may need to offer a detailed plan on how you intend to use the borrowed amount in order for your lender to approve you for financing.

Even if they don’t require a detailed plan, it’s always a good idea to have one. Taking the time to write out your plan will help you notice inconsistencies, issues, and challenges in your business, letting you reposition yourself to be a much stronger organization.

Any business that needs $6 million to take advantage of an opportunity or solve a challenge can secure a loan to cover the expense – if they meet the lender’s eligibility requirements.

However, you’ll need to ensure that you aren’t “throwing money” at an expense. You’ll need to approach the situation strategically, like those in the situation below:

• A construction company uses a loan to support the purchase of equipment, new hires, and upfront materials, allowing them to start the job with everything they need and pay over time.
• A popular local restaurant consistently reaches capacity and has to turn away customers. The space next door is empty, so they use a loan to support their expansion into that empty space.
• An eCommerce business has seen massive growth in its first two years. They want to establish a physical presence to strengthen their brand and leverage a loan to cover the costs.
• An electrical contractor notices that a local competitor is liquidating their company. They secure a loan to purchase their equipment at a discount and spread the cost out over time.
• A beverage manufacturer identifies an opportunity to sell their products in different states. They have the cash flow to support the plan, but they use a loan to preserve their cash flow.

If you’re confused about how financing can help with your specific opportunity or challenge, National Business Capital’s expert Business Finance Advisors can help you learn more.

You can use your loan funds for almost any business expense. Here are a few of the most common.

• Equipment
• Inventory
• Upfront materials for jobs
• Hire/train new employees
• Marketing
• Expansions or renovations
• Creating/upgrading your digital presence
• Investing in CRM software and other technologies

Remember that an expense outside of your financial capabilities isn’t unattainable. If your opportunity is worth taking advantage of or your challenge needs solving, business financing can yield the funds necessary to operate at your highest capacity.

There are a few formats in which you can receive your 6 million dollar business loan, with each option having unique benefits and drawbacks. Here are some of the most common types of $6 million business loans:

1. Term Loan

Term loans are given in one-time, lump sum payments that you must repay within the term outlined by your lender. You can use a $6 million term loan for almost any business purpose, including working capital management, expanding inventory, hiring additional staff, and purchasing a new building for your operation. 

However, you might need to offer a detailed plan on how you intend to use the borrowed funds to your lender. While this might seem unnecessary, it’s an extra security measure for the lender, and, more importantly, it’s an opportunity to plan out how you’ll use your financing in your business, which can help you streamline your growth.

2. Business Line of Credit

Business lines of credit are one of the most flexible financing options available to entrepreneurs. They’re a revolving line of credit that you can draw on whenever you need capital. When you repay the borrowed amount, you can draw on the same funds again, allowing you to stay one step ahead of the latest challenge. 

Unlike a business credit card, you can draw physical cash with a business line of credit. Many entrepreneurs will also use this financing option with another loan to manage their working capital as they pay back the more significant payment.

3. SBA Loans

SBA loans are some of the most coveted financing options because of their high borrowing amounts and competitive interest rates. The SBA 7(a) program allows you to borrow up to $5 million, and while that won’t allow you to borrow $6 million, it can get you most of the way there.

You can secure a $5 million SBA loan and a $1 million loan from an online lender to meet your $6 million needs. The options are endless, especially with SBA loans having some of the lowest interest rates on the market.

4. Invoice Financing

Invoice financing is an avenue to turn outstanding customer invoices into cash today. Otherwise known as accounts receivable financing, this option takes a percentage of your total outstanding payments and gives you cash in the short term, allowing you to pay expenses, increase inventory, and grow your business.

You’ll need to have at least $6 million in outstanding receivables to secure $6 million in capital through invoice financing because of the percentage you’ll pay to the lender for their assistance. But, if your business commonly deals with late customer payments, it can be a great way to finance your growth at a minimal cost to your operation.

5. Business Advance

Business advances are essentially a cash advance on your future sales. Your lender will review your financial information, including your annual revenue and outstanding payments, and determine if your business qualifies for this type of financing.

Once you’re approved, the lender grants a lump sum payment with your funds, which you can use to support your growth. Remember: You’ll need to generate at least $6 million in annual revenue to qualify for a $6 million business advance.

Growth isn’t cheap, and neither is managing the day-to-day operations of your business. Whether you’re a relatively new business or you’ve operated for years, there’s a high likelihood that you’ll find yourself in a situation where you need capital for one reason or another. Some entrepreneurs might choose to sacrifice other areas of their budget to shift funds around, which only weakens the integrity of their operation.

You don’t want to go backward; You want to prioritize your growth. Rather than jeopardize your business by cutting the budget, you can secure a 6 million dollar business loan to help you afford opportunities and take your business to the next level.

Researching for 6 million business loan lenders takes time, but you can streamline your search through a marketplace of lenders, like National Business Capital. Our team of expert Business Finance Advisors does the heavy lifting for you, taking the time to learn about your business and your challenges to connect you with best-fit financing solutions. We work with you every step of the way, genuinely care about your business, and have finely tuned our process to prevent you from wasting time and resources. Can it get any better?

If you’re ready to see your options, complete our streamlined, digital application to kickstart your search for a 6 million dollar business loan.