What could your small business do with a million dollars? Most small business owners think getting a million dollar business loan is a dream come true. Yet, do you really know what it takes not just to get a business loan of that size, but to pay for it? How much does a million dollars cost? Here’s what you need to know.
The First Step is Building a Fundable™ Foundation
Your small business needs a Fundable™Foundation to qualify for business loans. The foundation is how your business is set up.
A small business that isn’t set up to be Fundable™ will be hard pressed to get business loans of any type, especially traditional bank business loans.
For sure, a million dollar small business loan will be difficult to get. This is what sets your business apart from you as the owner. As a result, the foundation is the kick start to overall Fundability™.
What’s In a Fundable™ Foundation?
A Fundable™ Foundation is necessary for any type of business loans. That means a small business loan, vendor credit, credit cards, or any other type of business funding. It includes the following.
First, your business name needs to be registered with the Secretary of State. Furthermore, it should not include or allude to a high-risk or restricted industry. Lenders do not like risk, and most are not in the habit of making business loans to businesses in high-risk industries.
Also, your business name has to be consistent everywhere you use it. If it changes, change it everywhere, and be sure it is the same.
Consider the following examples.
“Bill & Tom’s Discount Fishing Lures, Inc.”
“Bill and Tom’s Discount Fishing Lures”
“Bill’s and Tom’s Discount Fishing Lures”
Of course, they are similar. Yet, they are not the same. So, if you use one of these on your registration with the Secretary of State and one of the others on your million dollar loan application, you may not even make it to the underwriting process.
Likely, your application will be automatically denied for business loans due to fraud concerns.
This must be a deliverable physical address, never UPS box or a PO Box. It’s true, a virtual address can work. Yet, we know of at least one credit provider that will not accept them.
You can get an EIN, or Employer Identification Number, free at IRS.gov. Then, use it to open a bank account and to build a business credit profile.
Be sure to verify that all agencies, banks, and trade credit vendors have this number and associate it with your business .
Using a corporation or LLC structure gives you more credibility. Better yet, it reduces your personal liability.
Business Phone and 411 Listing
Remember, toll-free phone numbers are best. Also, it should be listed in the 411 directory.
Always make sure you have the proper licensing.
Web Domain and Professional Website
For many reasons, you need a professional website that is helpful. Lenders will research your business online, especially before lending a million or more.
As a result, you should pay for web hosting. Unfortunately, this is not the time to use a freebie. Also, the domain should be the business name, if possible.
In addition, you need a company email address. It should be the same domain as your website.
Business Bank Account in the Business’s Name
Due to the fact that business banking history is vital to getting business financing, it is necessary to have a separate, dedicated business bank account. Of course, the longer the bank history is, the better.
Next Step is to Build Strong Business Credit
As you know, lenders like to see a strong business credit profile. As a result, while personal credit isn’t ignored, good business credit can soften the impact of a bad personal credit score.
Nothing Replaces a Strong Business Plan
Without a strong business plan you won’t get business loan approval. Whether you are looking for a traditional loan, SBA loans, or working with online lenders, this is important. This is true even though online lenders tend to be less strict with business financing approvals, a strong business plan never hurts. The presentation should be professional in both appearance and content.
Business Plan Writing Resources
You can hire a business plan writer, or do it yourself, but use all available resources.
The Small Business Administration offers helpful business plan writing resources, and not just for SBA loans.
The Small Business Development Centers have a number of helpful aids also. Check with local universities to find one near you.
The Major Clincher for a Million Dollar Business Loan is Revenue
Obviously, you can’t get funding without revenue. Of course, this is because business loan repayment comes from revenue, and lenders want to know they will be repaid.
But, exactly how much is the payment on a million dollar business loan?
Business loan terms and payment amounts are variable based on terms and rates. Consider a $1M loan with an interest rate of 4% fixed for 20 years. The monthly payments on that business loan would be $4,774.15.
Then, consider the same business loan with the same interest rate for 15 years. The payment on that is $7,396.88 a month.
A Word About Collateral
If you have a Fundable™ Foundation and strong business and personal credit, the next step to getting more funding is collateral. It allows for better loan terms, including more money with lower interest rates and better terms. Furthermore, many SBA loans require collateral anyway.
Types of Collateral
Collateral can be pretty much any valuable asset. These include:
- And more
What Does it Take to Get a Million Dollar Business Loan?
To get the most funding possible, whether through small business loans or other funding, you need:
- Fundable Foundation
- Good business and personal credit score
- Professional business plan
Credit Suite Can Help
We can help with the Fundability and business credit. We know the secret sauce to get you started and help you grow in the most efficient way possible.
Then, you can get the funding you need, when you need it. With Credit Suite, you may be eligible for a million dollar loan sooner than you think.