The Surprising Steps to Get a $500K Business Loan Revealed
September 5, 2022 | Last Updated on: September 5, 2022
September 5, 2022 | Last Updated on: September 5, 2022
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Small business loans can range from around $10,000 to $1 million. But, most small businesses and startups rarely finance more than $500,000 for any business need. But, just how easy is it to get a $500,000 business loan? Weâ€™ll reveal the surprisingly easy steps to getting a $500,000 business loan.
Well, nothing worth having is without some effort needed.
Applying for a traditional business loan ends in disappointment for many business owners. Thatâ€™s because traditional lending institutions, such as banks and credit unions, have higher standards for lending, making it hard for the average small business owner to qualify for a loan.
But over the past several years, a new player in business lending has become more prominent â€“ online and alternative lenders. Online lending marketplaces have become commonplace and have made borrowing money for your business easier.
Alternative lenders have more relaxed lending criteria and appeal to a wide variety of businesses and entrepreneurs at every stage of their business.
That said, there are always a few steps you should become familiar with before applying for your business loan.
Whether you go with a traditional bank or an alternative lender, the steps in requesting a business loan are similar. But for the sake of this writing, the focus will be on alternative lenders.
While the basic steps needed when applying for a $500,000 business loan are the same, one lender might have a different application process from another.
Generally speaking, youâ€™ll need to do the following:
While it could take months for the complete application process with a traditional lender, generally speaking, an alternative lender is quicker. A reputable online lender, like Biz2Credit, can often provide a 24-hour turnaround on your loan, particularly when youâ€™re thorough in filling out your application.
While a smaller loan amount may have fewer requirements by the lender, a $500,000 loan is substantial, and in many cases, specific criteria must be met to qualify for the loan. These include:
A $500,000 business loan is more likely to be obtained through a term loan or a commercial real estate loan. With these types of loans, you get your loan funds upfront and pay a fixed or set monthly payment.
Again, this will depend on whether or not you choose a traditional lender or an alternative lender to facilitate your loan. While traditional lenders typically have lower rates, many borrowers donâ€™t qualify for traditional loans. But if you can qualify for a $500,000 business loan with an alternative lender, chances are you can get more manageable loan terms. Interest rates for $500,000 business loans through an alternative lender are often capped at around 10%. But, depending on your credit and other factors, the rate could be higher or lower.
As with traditional bank financing, SBA loans are notoriously difficult to qualify for. Even if you manage to get qualified and approved for an SBA loan, the process is time-consuming and can take months. But, it’s a potential option you may want to explore if you donâ€™t need fast funding.
The SBA offers several types of loan programs, including:
There are other types of SBA funding, but these are the most common.
SBA loans are processed through third-party lenders who have been approved by the Small Business Administration.
Commercial financing for business owners with bad credit is typically limited to certain types of funding, such as invoice financing or merchant cash advances.
But to receive a larger amount like $500,000, you will usually need to have the unpaid invoices and revenue to back up that size loan amount.
Term loans, which are usually the kind of loans youâ€™ll see with a $500,000 business loan, are not usually an option when your credit is very poor.
However, some alternative lenders have lower credit underwriting criteria and will approve a business loan even when your credit isnâ€™t optimal.
Itâ€™s important to remember, however, that there is a difference between bad credit and a lower credit score. That said, alternative lenders will look at other factors that traditional lenders don’t that make it easier for them to better accommodate many small business owners with bad credit.
A sizable business loan of $500,000 is often used to purchase equipment, inventory, vehicles, real estate, or other types of physical property that secures the loan.
So, quite often, you donâ€™t need upfront collateral to qualify for the loan. However, collateral is sometimes helpful, especially when your credit is poor or you donâ€™t meet other underwriting criteria.
Cryptocurrency has become a major player in the finance world. While Americans, in particular, were slow to adopt cryptocurrencies, such as Bitcoin (BTC) and Ethereum, the momentum finally caught up, and crypto lending has become an option in some situations and with some lenders.
Crypto loans work by using cryptocurrency as collateral for the loan. Itâ€™s known as DeFi, or decentralized finance, and uses blockchain technology to leverage crypto assets for lending purposes.
The problem is that digital currencies, along with Wall Street and the stock market, are volatile and prone to fluctuating values, as the last year has shown. Also, the values of cryptocurrencies used across the metaverse are extremely subjective, meaning trying to nail down a real value is tricky.
While cryptocurrencies, along with NFTs, continue to be a trending interest for traders exploring novel financial services on the blockchain platform, it is probably best to keep it in its own lane.
For instance, if a small business owner has cryptocurrency and needs a loan, it may be best for them to convert their digital coins on a crypto platform into USD cash, then use it towards their business project, as a down payment, or as collateral for the loan.
It can be surprisingly easy for many small business owners to get a $500,000 business loan, particularly when applying with an online or alternative lender.
Traditional loans are another thing altogether and require a bit more jumping through hoops to get financing if youâ€™re fortunate enough to receive approval.
Some online lenders cut to the chase and require far fewer steps to get a business loan than some of their competitors do. Still, it pays to follow a few wise steps, such as gathering the required documentation and finding the best business loan provider for your goals.
More than 225,000 small business owners have discovered that Biz2Credit was the best option for their financing needs. With a streamlined process and astute lending professionals who are vested in their clientsâ€™ futures, getting a $500,000 small business loan has never been easier.
Whether you need a commercial real estate loan, an equipment loan, cash for unpaid invoices, or a working capital loan to meet operational expenses or fill in the gap during business downturns, Biz2Credit can help.
Just ask electrical contractor Angel Cabrera. When the recession slowed down his business and made it difficult for him to meet his financial obligations, Biz2Credit helped him pay down his debt by consolidating business expenses. A loan from Biz2Credit provided him the focus he needed to get his business going again.
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