Where can I get a $2 million business loan?
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Banks, credit unions, and online lenders often offer loans of up to $2 million to established firms. The Small Business Association (SBA) is also supporting loans of $2 million, but to apply for funding, you will need to apply to an SBA-approved lender. We know all about how to qualify for a 2 million dollar loan.
$2 million SBA loans
Since SBA loans are guaranteed by the federal government, they are one of the most affordable options out there for a small business owner looking for a large loan. They are also one of the most difficult loans to qualify for. In 2019, according to data from the SBA, only 100,000 applicants were approved for all SBA programs. For more information or to consult Commercial Real Estate Loan Pros of Miami.
Here’s how the $1 million loans for the SBA 7(a) program breaks down:
- Percent guaranteed: 75%
- Guaranteed amount: $750,000
- Closing of costs: Guarantee fee equal to 3.5 percent of the guaranteed amount, or $26,250, plus any additional charges by the bank or the lender.
- Maximum interest rate: premium + 2.75 per cent.
- Terms: 5 to 10 years for working capital and equipment; up to 25 years for real estate;
How do I qualify for a $2 million loan?
Your business needs to prove that it can afford a $2 million business loan. While the requirements vary by lender, you will typically need to meet the following criteria to be considered:
- Good to excellent credit. Lenders are looking for high personal and business credit scores. The better your credit score, the more likely you are to be approved.
- Two years of business. Lenders are generally wary of giving this amount to companies that are new to the game, especially if you apply to a bank.
- Annual revenue of $10 million. The higher your loan amount, the higher your income requirements. It might be possible to find $2 million in revenue financing under this amount, but it won’t be easy.
- Big profit margin. Besides having a strong annual revenue, many lenders want to see that your business is actually making money rather than even breaking.
- Personal guarantee, Many business loans require the owner or owners to pay back the amount they borrow with a bond on their assets. You and your business partners are likely to need at least $2 million in equity in your homes, cars, and other investments.
Company Credit Factor
Creditors can review the company at a variety of levels before turning over such a significant sum of money. They’re going to want to know if the company will run on a sound basis. Your debt-to-value ratio or the sum demanded, in this case, $1 million, in comparison to the funds you have saved, may then demonstrate good capital investment as a measure of financial stability. Another factor to be noted is working capital, or total assets minus existing liabilities. Even if you make enough money to pay back $2 million, lenders still want to see enough working capital.
Million Dollar Loan Services
Not all business-oriented grant schemes provide loan sums as high as $1 million but find those who do. One high-profile path is the General Small Business Administration Loan or 7(a) Loan, with a maximum sum of $5 million. Another alternative for a million-dollar business loan is called the CDC/504 loan scheme, which funds large acquisitions of fixed assets, such as real estate or machinery. If the small company has been disrupted by the reality that the main individual has been called to active military service and, as a consequence, the business has not been able to cover its regular operational costs, the SBA Military Reservist Economic Injury Crisis Loan program will finance up to $2 million.
Use Criteria
For a business to qualify for a million-dollar loan, some lenders will require the funds to be used in a particular way. For CDC/504 loans, the maximum amount of the loan depends on how the funds are used. To obtain up to a maximum of $5 million for a loan, you must meet the requirements of either job creation or public policy, such as the revitalization of the business district.
Financial, and Business Type
To apply for multimillion-dollar loans, businesses must follow strict financial approval requirements. As of writing, you must have a tangible net worth of $15 million and an annual net profit of less than $5 million after taxes to apply for a CDC/504 loan. Plan properties are used as leverage for these loans. CDC/504 loans are not open to some kinds of companies, including speculative and rental real estate investment firms. You must be deemed “thin” by SBA requirements for your sector, conduct business in the United States and its possessions, utilize alternative assets before requesting financial aid, show loan need, and not be in default on any federal debt obligations.
Documentation
You must submit various records to the local SBA-backed lender to show that your company requires the significant sum required and has the potential to repay a 7(a) loan. Personal and corporate financial records, company certificates, tax reports, and loan background are among these papers. Benefit and expense accounts, as well as one-year estimated income statements, will be used with financial statements. Similar documents are needed for the CDC/504 loan application.
Choose an SBA Lender
It’s time to choose a bank or lender that works with the SBA. Many lenders will offer 7(a) loans; you can find a state-by-state list on the SBA website. It’s a good idea to contact multiple lenders and, if possible, try to find a personal connection to the bank. When you meet the lenders, it’s important to dress professionally and bring copies of your business plan and financial projections.
This meeting aims to help the lender feel comfortable doing business with you. You want to show them that you’ve got a plan in place and strong financial projections to back it up. One of the best ways to show that you’re serious is to give up some kind of collateral. Lenders want to see that you’ve got some skin in the game, and collateral is the best way to prove it.
For more information or to consult with us, Check out the rest of our Commercial Real Estate Loan Pros of Miami website.
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