How much money can I borrow for a business?
How much of a business loan you can get depends on your business's annual gross sales, creditworthiness, current debts, the type of financing, and the chosen lender. In general, lenders will only provide loans up to 10% to 30% of your annual revenue to ensure you have the means for repayment.
| Lender | Average small business loan amount |
|---|---|
| Online loans | $5,000 to $250,000 |
| Short-term loans | $20,000 |
| Medium-term loans | $110,000 |
| Business line of credit | $20,000 |
| Lender | Average small business loan amount |
|---|---|
| Short-term loans | $5,000 to $750,000 |
| Business line of credit | Up to $1 million |
| Equipment financing | Up to 80% to 100% of the value of purchased equipment |
| Invoice financing/invoice factoring | 70% to 90% of the amount invoiced |
- At least one year in business. Most lenders require you to be in business for one to two years. ...
- Minimum monthly revenue. A general rule of thumb is that lenders will loan you 1x to 1.5x of your monthly revenue. ...
- Good personal credit. ...
- A personal guarantee.
You can apply for a $2 million business loan at a bank, credit union, or online lender, but keep in mind that $2 million business loans aren't as common as smaller lending solutions. This means they can be fairly difficult to qualify for – especially at banks and credit unions.
Small business loans offered by national and regional banks come with attractive terms, generous loan amounts and competitive interest rates.
The best startup business loans are an option for getting upfront cash to get your business up and running. They may also help build credit, which can lead to more affordable loans down the road. But make sure to consider all your options before applying, as there are risks to consider, including high rates and fees.
Some loans may be specifically marketed as LLC loans, but LLCs can apply for many standard business loans. If you have an LLC, you should have no trouble finding a business loan. You will need to qualify for the business loan requirements, but typically, lenders will give loans to multiple types of businesses.
While LLCs can be started at any credit level, there will be some notable disadvantages for business owners who have bad credit. Here are a few examples: Money will be hard to come by. Having bad personal credit will generally make it more difficult to get a bank loan to start or expand your LLC.
Do LLCs get loans easier? Approval for business loans for LLCs is based on several factors, including minimum credit score, annual revenue, time in business and industry. If an LLC is well established, getting a business loan may be easier.
Can you get an SBA loan without collateral?
Most small business loans, especially those guaranteed by the Small Business Administration (SBA), require the borrower to put up collateral. This gives the lender peace of mind in case the borrower is not able to return full payment. However, it is possible to get a business loan without collateral.
Bank Term Loans
You might be able to borrow $1 million or more, though you'll need strong business finances to qualify for a large amount. While big banks can offer large business loans, small community banks might have lower loan amounts.
The monthly payments of a million-dollar loan will depend on the term length, interest rate, and any additional loan fees. If calculating loan repayments based on the average term length (three to 10 years) and average interest rates (6%-12%), monthly payments can range from under $11,000 to over $33,000 per month.
Any assets you pledge should be worth at least as much as the amount your business wants to borrow. In other words, if you want to take out a $100,000 secured business loan, you may need to provide $100,000 worth of collateral to back the financing.
- QuickBridge – Best for Fast Business Loans.
- OnDeck – Best for Short-Term Business Loans.
- American Express® Business Line of Credit – Best for Business Lines of Credit.
- Wells Fargo – Best for Business Lines of Credit From a Bank.
- Fora Financial – Best for Large Business Loans.
The key steps and eligibility requirements to qualify for a business loan: Strong Credit History: Aim for a credit score above 680. Ensure no major financial red flags, such as bankruptcies or large unresolved debts. Consistent Revenue Stream: Demonstrate a steady inflow of income, ensuring you can manage repayments.
- Best for Quick easy business loans. Bluevine. ...
- Best for Easy short-term business loans. OnDeck. ...
- Best for Easy equipment loans. Triton Capital. ...
- Best for Easy business loans for bad credit. Fora Financial. ...
- Best for Easy unsecured business loans. National Funding. ...
- Best for Easy business lines of credit.
- Information about your business. ...
- Financial statements for you and your business. ...
- Details about the business's owners. ...
- Information about your collateral. ...
- Personal guarantee.
The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates they consider people with scores below 640, so even people with bad credit may be able to qualify.
Bottom line. Both personal loans and small business loans are effective ways to cover expenses to get your small business off the ground. Your choice may come down to how much money you actually need, where you can get the lowest interest rate and whether or not you want to put your personal credit on the line.
Is a business loan a tax write-off?
Business loan payments aren't tax-deductible. A business loan is not included as taxable income when a company receives a business loan. In turn, when that loan is repaid, you cannot deduct principal payments. You are simply paying back the money you borrowed, not spending money in any way you can write off.
Lenders typically review the LLC's credit score, annual revenue and time in business before approving the loan, making it difficult for less established LLCs to qualify. Personal guarantees may be required.
- Step 1 – Choose the Right Business Structure. ...
- Step 2 – Obtain a Federal Tax ID Number (EIN) ...
- Step 3 – Open a Business Bank Account. ...
- Step 4 – Establish Credit with Vendors/Suppliers Who Report. ...
- Step 5 – Monitor Your Business Credit Reports.
SBA Business Loan for New LLC: Your Options. Two primary SBA loan options are available for LLCs and other small businesses in need of financing: the SBA 7(a) loan and SBA 504 loan. Each has specific ways funds can be used, and they offer different loan terms and loan limits.
Over time, your LLC can build a strong business credit profile, which will help you access better financing options and business opportunities.
