Large business loans use to be difficult to find, and the criteria was very strict. However, with their increasing popularity in the past few years, there are many more options to choose from. In fact, last year Business News Daily rounded up business trends and predictions for 2017, and many experts agreed the economy and stock market showed signs of strength, leading to entrepreneurial confidence for business owners. Thus, we believe 2017 is the year to expand, grow, or start your new business venture. We have found the best options to obtain a large business loan in today’s climate below.
Traditional banks tend to be the go-to for business owners looking for a loan. You can find many traditional banks that offer large business loans. However, the approval rate may be 20% or lower, and the criteria is strict. Generally, traditional banks will want a good credit history, substantial collateral, proof of profitability for the last 3 years, and a detailed business plan including how the loan will be used. The challenge with going directly to a traditional bank is that they usually require a mountain of paperwork, including a detailed application and all of the required documentation upfront. The required documentation usually includes 3 years of tax returns, bank statements, business statements, and a personal financial statement.
Small & Community Banks
Many small and community banks are eager to finance large business loans. They have been targeting companies and business owners to offer competitive rates. The criteria is similar to that of the traditional banks however, small/community banks have a much higher approval rate, sometimes 50% higher than traditional banks. Oftentimes, small/community banks put more emphasis on the reputation of the business and do not solely focus on the financial picture. However, unlike traditional banks, small/community banks may have lower lending limits, which may make the traditional bank a better option.
The SBA offers loans up to $5M at a reduced risk to the lender. This can be a good option for business owners seeking large business loans. The SBA mitigates the risk and offers guarantees to lenders, which can make this another viable option. Unfortunately, the SBA approval process generally takes 2-4 months (even 6+ months), and the paperwork required can be behemoth compared to even what the traditional banks require.
Online Loan Aggregator
Online loan aggregators are becoming one of the most popular options for many business owners seeking financing. They are popular because they search the internet and find lenders for you, finding the best rates and terms available. Many online aggregators have access to SBA loans in addition to the traditional, small, and community bank loans. They also allow the immediacy of loan submission and the immediacy of an answer from the lender. Oftentimes, the process is shortened from weeks to just hours. Online aggregators have created a shift in how borrowers look for loans; they have truly put the borrower in control.
We suggest you begin your large business loan search using Magilla Loans because we enable you to shop and compare loans without the mountain of paperwork. Using Magilla also allows you to shop loans anonymously, learn how much money a lender is willing to loan your business, easily compare the terms and rates, and discover what criteria and/or documentation is required — many lenders will have different criteria. However you choose to search for your large business loan, we suggest you take advantage of the current climate.