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If your small business is looking for large amount of funding, you need to be ware that you need to comply with the requirements that the lender has. A million dollars is a lot of money from any perspective and it requires you to meet very specific criteria. If you find that you need a million dollars for your business, you first need to determine which lenders offer financing at this level.

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Many small business loans begin their financing search by researching the limits of the Small Business Administration’s general business programs. The SBA’s 7(a) program has a maximum of $5 million that it can lend out. Also, the CDC/504 SBA program can be looked into for significant fixed-asset purchases. These includes financing for real estate ventures or for large equipment purchases.

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Assessing the financial health of the business is done in different ways. One of the criteria you need is documentation that supports that the business can operate successfully with an additional large new debt. Also, the working capital is considered. Working capital is the current assets minus the current liabilities.

The borrower needs to have a purpose for the use of the loan that needs to be approved by the lender. There are loan limits set by lenders that vary based upon the purpose of the funds, such as the SBA’s CDC/504 program. The CDC/504 requires that the borrower’s net worth not exceed more than $15 million.

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The borrower needs to demonstrate that the business is need of the business loan and the paperwork to document the small business’ financial stability, you must provide lots of documentation. Documentation that is accepted includes personal and business financial statements, complete tax returns, profit and loss statements and income projections.

Venture capitalists requires you to submit your business plan to being the process. This can be challenging for a new business borrower. Angel investors are also a great source for financing large business loans. This type of funding may be challenging to find for most people, but it is worth trying.

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The best thing a borrower can do is prepare ahead by gathering a lot of financial documents..

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Although each lender has its own process, these steps should help guide your business toward the right loan option:Your first step should be to compare business loan lenders. Not every lender offers loans of $1 million, and those that do will have different requirements that could make the difference between approval and rejection.

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Loop a financial advisor into your plan for a $1 million business loan to ensure your business can afford it and develop a plan to repay it. This allows you to see your loan’s potential terms before your personal or business credit is officially checked. Not all lenders offer preapproval, but if it’s available, take advantage of it.

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Banks, credit unions and online lenders frequently offer loans up to $1 million for established businesses. The Small Business Association (SBA) also backs loans of $1 million, but to apply for funding, you will need to submit an application through an SBA-approved lender. Since SBA loans are guaranteed by the federal government, they’re one of the most affordable options out there for a small business owner looking for a large loan.

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Only 100,000 applicants were approved across all SBA programs in 2019, according to data from the SBA.Here’s how a $1 million loan breaks down for the SBA 7(a) program:75%$750,000Guaranty fee equal to 3. 5% of the amount guaranteed, or $26,250, plus any additional charges by the bank or lender, Prime more info button + 2.

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If you exceed a lender’s minimum requirements, you might not have any trouble. But if your business is less than a year old, not yet profitable or you have poor personal credit, you may be unable to qualify for such a large loan. Having an unpredictable cash flow or low revenue can also get your business rejected.

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While requirements vary by lender, you’ll typically need to meet the following criteria to be considered:Lenders look for high personal and business credit scores. The better your credit scores, the more likely you are to be approved. Lenders are generally wary of giving this amount to businesses that are new to the game, especially if you’re applying with a bank.

It might be possible to find $1 million in financing with revenue under this amount, but it won’t be easy. On top of having a strong annual revenue, many lenders want to see that your business is actually making money rather than breaking even. Many business loans require the owner or owners to back the amount they’re borrowing with a lien on their personal assets.