How to get a $500,000 business loan

Whether you need a long-term loan, a line of credit or a business cash advance, $500,000 loans come in many flavors. But you generally need to be in business for one to two years with a minimum monthly revenue of $350K to qualify. Compare providers to make sure you’re getting the most competitive rates and terms before you apply.

Where to get a $500,000 business loan

Most lenders offer $500,000 business loans, including banks, credit unions and online lenders. Established businesses might find more competitive rates on a business loan of this size with a large national bank. Newer businesses might want to try applying with alternative online lenders and SBA loan providers.

Compare $500,000 business loans

Select your time in business, annual revenue and credit score ranges to find lenders you might qualify with. Select Go to site to get started on your application. Or, visit our review page by clicking More info.

What types of $500,000 business loans are available?

Business loans for $500,000 cover a wide range of funding needs. Here’s a list of the most common types.

Type of financingDescriptionUseShort term loanAn unsecured lump sum loan with repayment terms of up to 18 monthsTo cover unexpected costs or to survive a downturnBusiness term loanAn unsecured lump sum loan with repayment terms up to 10 yearsTo provide working capital for more established businessesBusiness line of creditA revolving line of credit for ongoing needsTo tap into funds as needed and pay off as you goBusiness cash advanceA quick turnaround loan for newer businessesTo borrow against the money you plan to makeAccounts receivable financingA loan with an amount tied to your receivablesTo access cash by selling your purchase orders or receivablesSBA loanA low interest small business loan partially backed by the governmentTo provide working capital to grow your businessStartup loanA term loan for businesses with limited credit historyTo provide working capital to get your business off the groundEquipment financingA collateralized term loan to fund equipmentTo pay for any kind of equipment for your businessBusiness credit cardA revolving line of credit for ongoing needsTo tap into funds as needed and pay off as you go

Read more  Can I Qualify for an FHA Loan?

Secured vs. unsecured business loans for $500,000

Business loans can either be secured or unsecured. Most $500,000 business loans require some kind of collateral — especially if it’s an equipment loan or for commercial real estate. However, it’s possible to get an unsecured business loan of $500,000 from select online lenders.

Typically, you’ll need a higher credit score and stronger business financials to qualify for an unsecured business loan. You also might need to prove more business experience, requiring at least two years of experience for approval.

How to qualify for a $500,000 business loan

While a $500,000 business loan is below the average borrowing amount of $660,000, it’s still a big enough amount that your small business might have difficulty qualifying if you’re just getting started.

To qualify for a business loan of this size, you and your business must typically meet criteria the following criteria:

  • At least one year in business. Most lenders require you to be in business for one to two years. You might get away with six months in business for smaller amounts, but lenders tend to require stronger business experience for larger loans.
  • Minimum monthly revenue. A general rule of thumb is that lenders will loan you 1x to 1.5x of your monthly revenue. If you earn $500,000 a month, that means you could potentially borrow between $500,000 to $750,000.
  • Good personal credit. Business lenders often rely on personal rather than business credit scores. You generally need a credit score of 670 or higher, although 775 and up is better for a $500K loan. To compare top options for good credit borrowers, check out our guide.
  • A personal guarantee. It’s also common for lenders to ask for a personal guarantee from the business owner(s) — especially for unsecured loans that aren’t backed by collateral.
Read more   NMLS Processing Fees

How much does a $500,000 loan cost?

Since $500,000 business loans tend to have tight credit requirements, you can likely qualify for a competitive rate if you can qualify for this loan.

Depending on your business’s financials and your credit, you can expect an APR on the lower end of the spectrum of rates a lender offers, possibly around 10%. If you apply for an SBA loan, rates are capped at the prime rate plus 2.25% to 2.75% for most programs, depending on your loan term. This doesn’t include SBA loan fees, which vary depending on the loan.

Loans of this size also typically come with a loan term of at least a few years. Use the calculator below to find out how much your loan might cost based on different rates and terms.

How to get a $500,000 business loan

The application process varies depending on the lender you end up with. But you’ll generally follow these steps to find a lender that fits your business’s needs and apply for a $500,000 loan.

  1. Determine the type of loan you need. Before you start comparing, decide what type of loan you need. If you’re funding a one-time cost, look for a term loan. If you have ongoing expenses, look for a line of credit with a limit of $500,000 or higher.
  2. Compare lenders. Find and compare lenders that offer $500,000 loans by looking at the loan’s APR, terms and requirements. Also, do you need the money right now, or would you prefer to do more research first? Online lenders can get you funding fast, while banks tend to offer less expensive loans.
  3. Check your eligibility. Online lenders often have a form you can fill out online to find out if you’re eligible and check your rates. But if you’re applying through a bank, you might have to call in to make sure your business is eligible for a $500,000 loan before you apply.
  4. Gather the required documents. It helps to have your personal and business tax returns, profit and loss statements, and bank statements ready when you first fill out the application to help answer questions. You might also need to submit these documents digitally or physically.
  5. Fill out the application. This can take a few minutes to over an hour, depending on the lender and type of loan.
  6. Submit any additional information. Your lender will review your application and reach out for more information or documents if needed. Usually, you can submit these online, by mail or in person at a branch.
  7. Read and sign the contract. Review your final offer, making sure the rates, terms and monthly payments fit your business’s budget. If you agree, sign and submit your contract.
Read more  How to Qualify for a Car Loan

The turnaround time on $500,000 loans is often longer than loans of smaller amounts — lenders tend to be more thorough with your application. While some lenders advertise a 24-hour turnaround time, receiving your funds could take a few business days to a week.

Can I get a $500,000 SBA loan?

Loans backed by the Small Business Administration (SBA) offer low rates and high loan amounts to businesses that have a hard time qualifying elsewhere. But they also come with some of the highest rejection rates in the market.

Can I get a $500,000 business loan with bad credit?

It’s possible to find $500,000 in business financing if you apply for a merchant cash advance or invoice financing — but you’ll need the revenue or unpaid invoices to support this loan amount. Generally, term loans of this size are not available to business owners with bad credit.

Can I get a $500,000 loan to start a business?

Yes, but it’s rare for a startup or new business to qualify for high-dollar amounts at competitive rates. For other options, start with our comprehensive guide to startup loans.

Bottom line

You’ll typically need good credit and at least a year in business to get approved for a business loan of this amount, even with a secured loan.

To compare lenders and get prequalified, see our guide to the best business loans. To learn more about business loans first, check out our comprehensive guide to business loans, where you can learn more about the nuances of business financing.

Other business loan amounts: