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Wondering how to define “merchant services”? This term encompasses all the components used by a business to accept and process payments from customers. It can include hardware to ring up purchases in person, software to process online payments, and banking services to approve payments and transfer funds to your business account.

Putting the right set of merchant services in place is important for any business. Here’s what to know about selecting the exact services you’ll need, keeping costs low, and choosing a merchant services provider.

Understanding Merchant Services

What are merchant services? As a group, merchant services are the equipment and processes through which customers pay for a business’s products.

Merchant services include point-of-sale (POS) systems, online payment processing, and software to track sales and inventory. Businesses often work with merchant services providers when selecting and setting up their payment infrastructure. If you’re signing on with a merchant services provider, expect to pay for the hardware (via purchase or lease), processing fees, and potential subscription costs.

How Merchant Services Work

Merchant services combine hardware and software to process transactions and track your sales. Here’s how.

•   Brick-and-mortar businesses: Hardware devices take in customer payments, whether cash, card, or the tap of a mobile phone’s digital wallet. The accompanying software processes the payment and, over time, tracks your sales.

•   Internet-based businesses: Your company needs to accept payments online. Common methods include online payment service providers, mobile payment apps, or ACH transfers.

•   Service providers: Merchant services for your enterprise may require invoices that can be sent and paid electronically. You can opt for net 30 payment terms or whatever deadline you prefer, and send out automated reminders to customers as needed.

When a customer pays you, the funds go to your merchant account, which is usually held by your merchant services provider. The payment is approved by the bank that issued the customer’s card and then settled, typically one to three business days after the transaction. At that point, the funds are deposited into your business checking or other designated merchant account.

Recommended: Business Line of Credit

Types of Merchant Services

Of the many merchant services you might use to support your business, here are some of the most common options.

POS Systems

A point-of-sale system consists of the hardware and software that work together to accept customer payments. The system might include registers, credit card readers, kiosks, or even just a phone or tablet. Depending on your business, you may also need extra accessories, like a barcode scanner or receipt printer. POS software processes the payments and tracks your sales.

Payment Gateways

A payment gateway is a service that enables business owners to accept payments on their website. It handles and encrypts customers’ credit or debit card information and acts as a bridge to a payment processor. If the customer’s credit card issuer authorizes the transaction, the payment gateway receives and confirms that authorization. The funds are then credited to the merchant account.

Recurring Payment Processing

Subscription-based businesses can automate their billing with a payment processing service. This lets your customers authorize recurrent charges to their bank account, credit card, or debit card. As a merchant service, the payment processor securely stores customers’ payment data, automatically charges subscriber accounts on each billing date, and manages fund transfers.

Mobile Payments

Merchant services can also include mobile payment systems, with which your business can accept payments through channels like mobile wallets, peer-to-peer apps, QR code payments, and text payments. To receive these payments, you may need a portable card reader that you can connect to a phone or tablet.

Recommended: Equipment Financing

Benefits of Merchant Services

Your business’s use of professional merchant services is generally a plus for both you and your customers.

•   Increased security: Keeping financial data private is a major responsibility. A reliable merchant services provider can help you make sure you’re protecting your customers’ payment information.

•   More customer payment options: Expanding your merchant services allows you to accept more payment types, such as digital wallets and credit cards, which could attract more customers.

•   Faster checkouts: An updated payments system can make it easier and faster for customers to check out, either online or in person.

•   Steady cash flow: Your merchant services provider should present a schedule for how quickly funds will be processed and deposited into your business account. Having a clear timetable can help you manage your cash flow effectively.

Costs of Merchant Services

Adding merchant services to your business does come with some costs, which may include:

•   One-time charges such as hardware purchases and setup fees

•   Monthly software fees

•   Per-transaction processing fees

•   Early termination fees if you close your account before the contract ends

You’ll want to consider the price of the full merchant services package as you evaluate and compare potential providers.

Recommended: Startup Business Loans

Choosing the Right Merchant Services Provider

When investigating what merchant services is able to provide for your business, you’ll want to analyze such factors as:

•   Available services: As you’ve seen, the merchant services definition includes many different types of payment processes. Think about the services you need now and how your needs may change in the future.

•   Fees: Both upfront and ongoing costs can vary significantly. Get multiple quotes to compare how much each provider would charge to set up your merchant services and maintain them.

•   Funding time: The speed with which customers’ money shows up in your bank account will affect your business’s cash flow, so ask how long it takes to settle payments.

•   Customer support: Find out when the provider’s customer support team is on duty and what contact methods are available.

•   Future growth: If you have plans to expand your business, inquire ahead of time if it would be easy to scale as you grow or if you’d be locked in to the original contract terms.

Alternatives to Traditional Merchant Services

Instead of traditional merchant services providers, you may also consider a payment facilitator (payfac) service. A payfac uses a master merchant account rather than requiring each company to open its own individual account, meaning it may be able to onboard your business faster.

However, payfacs tend to limit the customization of your payment processing. Additionally, they’ll likely charge a flat rate for each transaction, so for high-volume businesses, a payfac could end up costing more than a traditional payment processor.

The Takeaway

Merchant services can be defined as the hardware and software a business uses to accept and process customer payments. These services manage transactions by transferring the customer’s payment to a merchant account and then to the business’s operating account. The customer generally benefits from increased security, more payment options, and faster checkouts, while the business is likely to see a steadier cash flow.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Do I need a merchant services account to accept credit cards?

It’s possible for a business to accept credit cards without a merchant services account by using a payments facilitator (payfac) instead. The payfac uses its own master merchant account for all of the merchants it works with, and after a transaction is settled, the payfac transfers your funds to your business account. You’ll still need hardware and software for in-person dealings.

What fees are typically charged for merchant services?

Merchant services fees can vary based on what services you’re using. Common expenses include hardware and software costs, setup fees, monthly fees, transaction fees, and early termination fees.

Can small businesses benefit from merchant services?

Yes, merchant services can be extremely useful to small businesses. For example, merchant services help a retailer process a wider variety of payment types, making it easier for customers to complete their transactions.

How secure are merchant services transactions?

Merchant services transactions are meant to be secure, thanks to technology like data encryption and fraud protection. But it’s best to review these features in depth when selecting your merchant service provider, as you shouldn’t assume they all offer the same level of security.

What’s the difference between a payment gateway and merchant services?

A payment gateway is the intermediary between your business and the customer’s bank when the customer makes an online payment. The merchant services definition is much broader. It includes all the different types of payment services, hardware, and software that a business may use to accept payments.

Photo credit: iStock/Diamond Dogs

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

This article is not intended to be legal advice. Please consult an attorney for advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q425-010

Health care providers often need specialized medical or dental equipment to treat their patients. But the crucial machines can come with a hefty price tag that’s hard for health care practices to pay upfront.

One possible solution is medical equipment financing. Health care practices can pay for equipment via secured loans, potentially helping them manage cash flow better and preserving working capital.

What Is Medical Equipment Financing?

Medical equipment frequently commands eye-popping prices. A PET/CT scanner, for instance, can start at about $225,000 and cost as much as $750,000 for top-of-the-line models. Paying for expensive equipment with cash could easily drain a business’s cash reserves, leaving it with little working capital and perhaps without a cushion for emergency expenses.

Medical equipment financing companies can help with this situation. Lenders offer borrowers a secured small business loan — generally set up as a traditional term loan — with the machinery itself serving as collateral. Rates and loan terms will vary.

Recommended: Startup Business Loans

How Medical Equipment Financing Works

Health care equipment financing provides a lump sum of money to a medical or dental practice so it can upgrade or purchase the machinery it needs for tending to patients. The loan spreads out payments over a term of several years, allowing the practice to protect its cash reserves.

Banks and other traditional lenders can be sources of equipment loans, as can medical equipment financing companies and vendors.

Benefits of Medical Equipment Financing

Health care equipment financing can be a way for medical and dental practices to access machinery and devices that would otherwise be out of reach. Having the most up-to-date equipment may enable practices to deliver even better patient care.

From a financial perspective, one major benefit of a medical equipment loan (as mentioned above) is that it preserves cash for the business. The practice can then use its existing funds for other needs.

Also, the predictable expense of fixed monthly loan payments can be convenient for budgeting. If the business’s cash flow is unpredictable, lenders may offer flexible repayment terms instead. One example is revenue-based financing, in which borrowers repay a loan based on business income rather than with fixed monthly payments.

Businesses with less-than-great credit may get better interest rates and terms on secured equipment financing than on unsecured loans. This is because the collateral generally lessens the lender’s risk. If a borrower fails to repay on time, the lender can seize the equipment to recoup their losses.

Finally, if the loan repayment helps improve the business’s credit score, future borrowing is likely to be easier and less expensive.

Common Uses for Medical Equipment Financing

Medical equipment financing can be used for a number of purposes.

We’ve already touched on purchasing new equipment. With health care equipment finance agreements, a practice could buy diagnostic tools, surgical equipment, x-ray units, ultrasound systems, dental chairs, and other high-priced machines. Getting new equipment can help practices upgrade or expand their services to provide the best care possible.

Equipment financing proceeds can also be used to repair devices or machinery that the practice already owns.

Businesses sometimes use equipment loan money on purchases that aren’t medical tools per se. Part of the lump sum loan could be used for office management software and IT to run a practice. Other possible purchases might include office furniture, copiers, or cabinetry.

Alternatives to Medical Equipment Loans

One important alternative to equipment financing is equipment leasing. An operating lease is basically a rental agreement. In exchange for using equipment owned by someone else, you agree to make regular monthly payments over a set period known as the lease term.

When the lease ends you typically have three options. You could decide to renew the lease, or you might decide you no longer need the equipment, or you might want to upgrade to something newer.

If you made an arrangement known as a finance lease or capital lease, you’ll generally have the option to buy the equipment at the end of the lease term.

When deciding between leasing vs purchasing equipment, consider the equipment’s useful life and what you’ll use it for. Leasing may be a good option if you expect to need a piece of machinery for only a brief time or you want to be able to upgrade the item easily and frequently.

A business line of credit may be an option for some equipment purchases. A line of credit is a form of revolving credit. It allows you to borrow up to a certain limit; you will owe interest on the amount you withdraw until you pay it back. Whatever money you pay back during the draw period becomes available to you to borrow again. Once the draw period ends, though, the lender generally expects the outstanding balance to be repaid in accordance with the credit agreement.

Because lines of credit typically charge higher interest rates than equipment loans, they are a more expensive form of capital. To manage the money wisely, it’s worth figuring out how soon you’ll be able to pay off the balance.

Recommended: Business Checking

How to Qualify for Health Care Equipment Financing

Your eligibility for medical equipment loans will typically depend on multiple factors. Lenders will want to see several kinds of information about your business, including:

•   Good credit history and cash flow. Lenders usually prefer borrowers who have a history of paying debts on time, who don’t carry too much debt at once, and who have enough revenue to cover debt payments along with the business’s operating costs.

•   Tax and financial statements. These give lenders a clearer look at your practice’s financial health over time.

•   A business plan. This should clearly describe the practice’s operations, market, revenue, and costs. It should also detail the ways you expect the new piece of medical equipment to have a positive impact on the business.

Some lenders may ask that you make a down payment, which helps further decrease their risk, even when the equipment itself is serving as collateral for the loan.

Tips for Choosing the Right Financing Option

If you want equipment financing, it pays to shop around. Compare several health care equipment finance offers, looking closely at interest rates, fees, and terms. Ask for clarification of loan conditions, including provisions like prepayment penalties. And be sure that the repayment schedule aligns with your cash flow.

The Takeaway

Medical equipment financing commonly takes the form of secured loans, collateralized with the equipment itself. Financing can improve a health care practice’s access to updated equipment while preserving the practice’s cash flow. Equipment leasing and business lines of credit are possible alternatives.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

Can I finance used medical equipment?

You can use an equipment loan to finance used medical equipment. However, interest rates may be higher and loan terms may be shorter than for new equipment. The rationale is that used equipment could have a reduced lifespan and higher likelihood of damage.

What credit score is needed for medical equipment financing?

Applicants with credit scores above 650 are more likely to get medical equipment loans. Borrowers with lower scores may be able to find lenders who will work with them. Note that lenders may charge higher interest rates and more fees to borrowers with lower credit scores.

How long can I finance medical equipment for?

Medical equipment typically has a useful life of between five and 15 years, depending on its type and function. As a result, financing terms are typically 10 years or less.

Is leasing better than financing medical equipment?

Leasing is not necessarily better than financing; it depends on the equipment. For expensive items that are likely to need frequent upgrades, it may be a worthwhile option.

Are there tax benefits to financing medical equipment?

Yes, there can be tax benefits for financing medical equipment. For certain equipment types, the IRS allows you to deduct the entire purchase price (subject to phase-out provisions) in the year the machinery is put into service. This is allowed even if the purchase was financed — but the deduction amount can’t exceed the net taxable income from all your business activities.

Photo credit: iStock/andresr

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q425-009

Many small businesses take out loans to cover day-to-day operating expenses, hire staff, or make a big purchase. And, while there are many loans available in the $5,000 to $100,000 range, what can you do if you’re dreaming bigger?

Many banks and other lenders offer million-dollar business loans (and even much higher amounts) to help small- and medium-size businesses see their growth skyrocket.

Here’s what you need to know about large business loans, where to find the best options for your business, and how to apply.

What Is a Large Business Loan?

A large business loan is one of $500,000 or more. It can be used to acquire another business, buy real estate, or get high-dollar equipment for your company.

Typically, small business loans, Small Business Administration (SBA) loans, and business lines of credit all max out at around $5 million. Financing for purchasing or expanding commercial real estate can offer $10 million or more.

Repayment terms for large business loans can extend many years. These types of loans are available from traditional banks, credit unions, and online lenders.

Who Typically Needs a Large Business Loan?

Large business loans are typically needed by established companies planning major expansions, acquisitions, or capital-intensive projects. Businesses may seek these loans to purchase commercial real estate, invest in large equipment, fund mergers, refinance existing debt, or support rapid growth.

How Do Large Business Loans Work & What Are Their Uses?

You can use a large business loan for many purposes, including:

•   Purchasing commercial real estate to expand your space or open new locations

•   Fulfilling large orders

•   Expanding your product line

•   Buying large assets or equipment

Large business loans can be harder to come by than smaller ones. For a business to get a large loan, it typically needs to have a good track record, show several years in business (or have experienced explosive growth in a short time), report a good business credit score, and be able to back the loan with collateral.

Unlike smaller loans, which often have simple online applications with an instant response on whether you’re approved, a large business loan may require a more in-depth application process that can take several weeks or months.

Lenders may ask how you plan to use the loan funds. For example, if you’re purchasing equipment, you might need to provide details such as the item’s model, age, and intended use.

You may also need to provide financial statements or tax returns to show that you’re fiscally responsible enough to pay back such a large loan. Some lenders, particularly traditional banks, may require you to visit a physical branch to complete the application.

Pros and Cons of Large Business Loans

Should you take out a large business loan? Below are the pros and cons of large business loans.

Pros of Large Business Loans

If you have big plans for your business, you might not have a way to fund those plans other than a large loan. Maybe you want to acquire another business that’s asking $1 million as the purchase price. You know it’s a great value, but you don’t have the capital.

The better your credit and financial history, the lower the rate you’ll typically pay. Also, the longer the loan term, the lower your payments will be, though you will likely pay more in interest overall with a longer term.

If your business doesn’t see consistent revenue from one month to the next, having a large amount of cash can ensure you have steady access to working capital when you need it.

Cons of Large Business Loans

Like any financing, you’ll pay interest on a large business loan. And the larger the loan, the more interest you’ll pay in total.

If you’re in a hurry to get financing, a large business loan may not be right for you, because it typically takes weeks or months for your application to be processed.

While having a large lump sum of cash can be appealing, you have to be able to pay it back. A large loan payment each month could strain your budget.

Where Can You Find Large Business Loans?

As you start your research on how to get a large business loan, you can look to banks, credit unions, and online lenders. The SBA has several loan programs with high caps to consider, as well.

Traditional Banks vs. Online Lenders

When seeking a large business loan, it’s important to weigh the differences between traditional banks and online lenders. Banks often offer lower interest rates and more established reputations but have stricter eligibility requirements and longer approval processes.

Online lenders, on the other hand, provide faster funding and more flexible criteria, though rates may be higher. Choosing the right lender depends on your business’s credit profile, urgency of funding, and willingness to meet documentation requirements.

Qualifying for Large Business Loans

The qualification requirements for a large business loan will likely be more stringent than for a $5,000 loan because there is much more risk to a lender. You’ll need to have:

A proven track record: To approve a large loan, lenders often want to make sure that a business has been operating for at least a couple of years. Generally, the more experience you can show, the better.

Large revenue: Companies that qualify for large business loans tend to have very strong revenue to show potential lenders.

Strong credit scores: Good scores show lenders that you have a history of paying your personal and business debts on time. This gives a lender confidence that you’ll end up paying back a large business loan fully and on time.

Sufficient collateral: Having business collateral can make it easier to qualify for a large business loan. It lets the lender know that even if you should default on your loan, they could still get their money back by seizing the assets you put up as collateral.

Types of Large Business Loans

There are many different types of business loans to explore when you’re looking to borrow high dollar amounts.

SBA Loans

SBA loans are issued by traditional bank lenders but guaranteed by the Small Business Administration. With SBA-backed loans, such as the 7(a) and 504 loan programs, you can borrow up to $5 million.

SBA loans typically offer the best rates, along with term lengths of 10 to 25 years. These loans can be used for a wide variety of business purposes — from purchasing a new business to covering working capital needs.

Commercial Real Estate Loans

Commercial real estate loans help businesses purchase commercial property, such as an office building, hotel, or retail space. They are available from private lenders, banks, and the SBA. Just like getting a mortgage to buy a home, commercial real estate loans typically come with long repayment terms and are secured by the property being purchased.

Secured Business Loans

Secured business loans are backed by collateral. This means that, should you be unable to pay off your loan, the lender has the right to seize that asset to cover your debt. Examples of collateral include real estate, equipment, and inventory. You may or may not also need to make a down payment on the loan.

Accounts Receivable Financing

Another option for getting the cash you need is accounts receivable (AR) financing. This allows you to borrow against the value of your unpaid invoices.

Accounts receivable financing allows businesses to get early payment on outstanding invoices and purchase orders. If payments are delayed, the business still has the funding it needs to continue operations. When payments come through, customers pay the lender directly.

Since the loan is secured by your invoices — money your business has already made — the risk tends to be lower for both you and the lender. You can often find AR financing products from online lenders.

Franchise Loans

If you plan to purchase a franchise or already operate one that could use an infusion of cash, franchise loans may be worth considering.

Recommended: How to Buy a Franchise

Business Lines of Credit

If you don’t plan to use a large business loan all at once, a business line of credit may be a better option than a loan. Similar to a credit card, a business line of credit allows you to borrow up to a set limit and gives you access to funds as you need them. You pay interest only on the amount you borrow.

Equipment Financing for Large Purchases

Equipment financing is an effective way for businesses to make large purchases without depleting cash reserves. By using the equipment itself as collateral, companies can secure funding for expensive machinery, vehicles, or technology while spreading the cost over time.

How to Get a Large Business Loan

Large business loans usually have more hoops to jump through in the application process. You may be required to provide tax statements, financial documents, and even a business plan. Many lenders will want particulars on how you will use the funds, and may also ask about assets you can use as collateral.

See below for a list of records you may need to submit:

Personal & Business Information

With many lenders, you can fill out an online application. To get started, you’ll likely need to provide:

•   Your name, phone number, email, and social security number

•   Business name, address, and EIN

•   Business industry

Time in Business

Lenders will want to know how long you’ve been in business. Most lenders want to see at least six months of business history. For larger business loans, they may want to see a few years of history.

Credit Score

To qualify for a large business loan, lenders typically like to see a minimum credit score of 680, though this may vary. The lender wants to make sure you’ll be able to pay back a large amount of money. The stronger your score, the better the rate you can receive.

Annual Revenue

Businesses seeking a large business loan typically need to be bringing in high annual revenues. The amount will vary depending on the amount you want to borrow, your business history, and your credit score.

Intended Use of Loan

When you apply for a business loan, lenders will want to see a detailed business plan. If you explain that you’re using the money to purchase a second location, for example, this gives the lender more security knowing that if you default, they can seize the property.

Desired Loan Amount

How much you want to borrow factors into your application. The more you hope to receive, the more stringent the lender’s requirements will likely be.

Collateral

Most large business lenders will want you to put up collateral before qualifying you for the loan. Collateral can include property, equipment, machinery, vehicles, accounts receivables, and investments.

Larger loans tend to take longer to process than small loans, so it may be weeks before you get a response from the lender, particularly for bank and SBA loans. Once you’re approved, you will need to review the loan agreement, which will tell you how much you have been approved for and the repayment terms.

Once you sign the agreement, the funds can often be deposited into your bank account in as little as one business day.

Alternatives to Large Business Loans

If you don’t qualify for any of the business loans above, you have a few other options to acquire financing.

Peer-to-Peer Lending

Rather than going through a bank to be approved for a loan, you can also borrow money through peer-to-peer lending. This is a situation where private individuals, rather than banks or online lenders, loan money to businesses.

There are websites specializing in connecting private investors with companies seeking financing. Rates may be higher than with traditional loans, but you may find these loans easier to qualify for.

Venture Capital

If you run a startup and are willing to give up equity to investors in exchange for capital, venture capital may be an option. Sometimes investors bring more than money to the table, as they may have useful industry contacts and advice to help your business grow.

Crowdfunding

Crowdfunding allows you to create a campaign online to raise funds for a particular purpose, such as launching a new product line. Anyone who finds your campaign interesting can donate. Typically, these funds do not have to be repaid.

Some crowdfunding sites require you to give a gift to contributors, such as your product, a T-shirt, or a personal experience with your brand.

Revenue-Based Financing

Revenue-based financing allows small businesses to access capital in exchange for a percentage of future revenue rather than fixed monthly payments. Repayments rise and fall with sales, which can make this option appealing for companies with fluctuating income or seasonal revenue.

Recommended: Small Business Credit Cards

The Takeaway

When the time comes for your business to expand, buy new equipment, or fill an unusually large order, you might find yourself in need of a large business loan.

For a business to get a large loan, it often needs to have a good track record, have been in business for several years (or have experienced explosive growth in a short time), show a good credit score, and more than likely offer collateral to secure the loan.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How big can a business loan be?

Business loan amounts vary by lender and loan type, ranging from a few thousand dollars for microloans to several million dollars for SBA or commercial loans. The maximum amount you can borrow depends on factors like business revenue, credit profile, loan purpose, and lender requirements.

What is considered a large business loan?

A large business loan typically refers to financing of $500,000 or more, often used for major expansions, commercial real estate purchases, or large equipment investments. These loans usually require strong credit, solid financials, collateral, and a proven business track record, and are offered by banks, SBA programs, or institutional lenders.

How hard is it to get a $1 million business loan?

While criteria to qualify vary from one lender to another, many lenders want to see high credit scores, at least three years in business, and annual revenues.

Can you get a large business loan with no collateral?

There are large business loans that do not require collateral. However, these tend to charge higher interest than those that do require collateral. Peer-to-peer lending is an option if you do not have collateral to put up against a loan.

Where can large business loans be found?

There are many lenders who offer large business loans, including banks, credit unions, SBA-approved lenders, and online lenders.

Photo credit: iStock/Kerkez

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q425-043

Small business owners often need quick access to capital to manage cash flow, expand operations, or cover unexpected expenses. Small Business Administration (SBA) Express loans can offer a streamlined, faster alternative to traditional SBA loans, providing up to $500,000 with simplified documentation and faster approval times.

This guide explains how SBA Express loans work, who qualifies, and how they can help your business grow efficiently.

What Is an SBA Express Loan?

Part of the SBA loan program, the SBA Express loan provides the same SBA-backed financing as other SBA loan programs like 504 and 7(a) loans, but often faster. It’s ideal for businesses that need quick access to capital.

Loan Amounts

Borrowers can get up to $500,000 with the SBA Express loan program. Business collateral is not required for loans up to $50,000.

Interest Rates

The interest rate for an SBA Express loan is determined by the lender but is capped by the Small Business Administration. Rates typically vary based on the borrower’s creditworthiness, loan amount, repayment term, and prevailing market rates, with SBA guidelines setting the maximum allowable interest the lender can charge.

Recommended: What Is the Minimum Credit Score for a Business Loan?

Repayment

Repayment terms may also vary, depending on your qualifications, how much you borrow, and what you intend to use the funds for.

SBA Express loans for real estate have repayment periods of 25 years. If the loan is for equipment, working capital, or inventory, the repayment period is 10 years. A line of credit through the Express loans program also has a repayment period of up to 10 years.

Processing Time

The appeal of the SBA Express loan is its fast processing time. The SBA will typically review your application within 36 hours and give its decision. Funding times average five to 30 days, but may be up to 60 days depending on your lender.

Approval and Turnaround Time

Once you’ve been approved for an SBA Express loan, you’ll need to review the loan agreement to understand how much interest you’ll be paying on the loan and how long you have to pay it back.

After you sign the agreement, the lender will process it and send the funds to your account. Each lender is different in how quickly it will send those funds. Some can send them the same day, while others take a few days or even weeks.

Key Benefits of SBA Express Loans

SBA Express loans provide small businesses with faster access to capital and simplified application requirements compared to traditional small business loans. They offer flexible terms and competitive rates, making them a practical option for short-term funding needs.

Key benefits of SBA Express loans include:

•   Quick approval, often within 36 hours for eligible applicants

•   Loan amounts up to $500,000

•   Simplified application and documentation process

•   Competitive interest rates capped by the SBA

•   Flexible repayment terms tailored to business needs

Recommended: How to Get Fast Business Loans

Why Consider an SBA Loan?

When it comes to comparing conventional vs. SBA loans, SBA loans are often seen as preferable because they offer lower interest rates than many banks, credit unions, or online lenders can provide. Also, they tend to have the longest repayment periods, which means they require lower monthly payments over a longer period of time. (Keep in mind, though, that longer payment periods typically mean you’ll pay more in interest overall.) Collateral requirements for an SBA loan may also be lower than banks require.

Alternatives to an SBA Loan

If you don’t qualify for an SBA loan, there are other financing options that may still help you access the capital your business needs. Depending on your credit profile, business history, and funding purpose, exploring different types of business loans or non-loan funding sources can provide flexibility, though terms and costs may vary.

Alternatives to an SBA loan include:

•   Online business loans that evaluate factors beyond credit scores, such as revenue and cash flow

•   Business lines of credit for flexible, ongoing access to funds

•   Equipment financing for purchasing machinery or vehicles using the asset as collateral

•   Merchant cash advances based on future sales (often higher cost)

•   Small business grants, which do not require repayment and can reduce the need for borrowing

•   Small business credit cards to help cover short-term expenses and manage cash flow

SBA Express Loan Requirements and Eligibility

To qualify for an SBA Express loan, businesses must meet both SBA program rules and lender-specific requirements. While the SBA sets general eligibility standards, individual lenders evaluate factors like creditworthiness, financial stability, and business operations. Meeting these criteria can improve approval odds and lead to more favorable loan terms.

Credit Score and Financial History

Lenders consider your credit score and overall financial history when evaluating eligibility for an SBA Express loan, as these factors help assess repayment risk. While the SBA does not set a strict minimum credit score, many lenders prefer applicants with good to excellent credit, along with a solid track record of managing debt, consistent revenue, and healthy cash flow. A clean payment history and well-documented financial statements can strengthen your application.

Business Size and Type Guidelines

To qualify for an SBA Express loan, your business must meet the SBA’s definition of a small business, which is based on industry-specific size standards such as revenue or number of employees.

To be eligible for any 7(a) loan (a category into which the Express loan falls), your business must:

•   Be for profit

•   Be an eligible business in the U.S. or its territories

•   Be creditworthy

•   Have a reasonable ability to repay the loan

Most for-profit businesses operating in the U.S. are eligible, though certain industries — like speculative real estate or lending — may be restricted. Lenders also typically look for businesses with an established operating history and a clear, viable business model.

How Can Funds from an SBA Express Loan Be Used?

Just as with SBA 7(a) loans, funds from SBA Express loans can be used for business-related expenses.

Working Capital

SBA loan funds can provide essential working capital to help small businesses cover day-to-day operational expenses. This includes payroll, rent, utilities, and other recurring costs, ensuring the business can maintain smooth operations during periods of growth or financial strain without disrupting cash flow.

Equipment and Inventory

Funds from an SBA loan can also be used to purchase equipment or stock inventory necessary for running and expanding your business. Whether you need machinery, technology, or raw materials, using loan proceeds for these purposes allows businesses to invest in growth while spreading the cost over time.

SBA Express Loans vs. 7(a) Loans

SBA Express loans and SBA 7(a) loans are both popular financing options backed by the Small Business Administration, but they differ in speed, loan limits, and application requirements.

SBA Express loans are designed for faster access to capital, offering loan amounts up to $500,000 with streamlined paperwork and quicker approval times — often within days. In contrast, SBA 7(a) loans typically allow for larger loan amounts and longer repayment terms but involve a more detailed application and a longer approval process, making them better suited for businesses that can wait for funding and need more substantial financing.

Recommended: Guide to Funding a Small Business

The Takeaway

SBA Express loans are a streamlined loan option under the U.S. Small Business Administration (SBA) program, offering up to $500,000 with faster approval times compared to standard SBA loans. These loans provide businesses with working capital or funding for growth, often with less paperwork and flexible terms.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What is an SBA Express loan?

An SBA Express loan provides up to $500,000 to small business owners. Unlike other SBA loans, the application process is expedited, and the SBA will review it within 36 hours. However, your lender may take 30-60 days to process your application and fund your account.

What are the pros and cons of an SBA Express loan?

The biggest advantage of an SBA Express loan is how fast your application will be processed compared to other SBA loans, allowing you to get your cash faster. A drawback may be that only those with good credit may qualify, and funding times may still be lengthy compared to traditional business loans.

What can I use an SBA Express loan for?

Just as with any SBA loan, you can use your Express loan to cover business expenses like buying equipment or inventory. You can also hire employees or purchase real estate.

How long does it take to get an SBA Express loan?

An SBA Express loan typically receives an initial SBA response within 36 hours, which is faster than other SBA programs. However, the full approval, underwriting, and funding process usually takes a few weeks, depending on the lender, borrower qualifications, and how quickly documentation is provided.

What credit score is needed for an SBA Express loan?

Most lenders prefer SBA Express loan applicants to have a credit score of at least 600. While the SBA doesn’t set a strict minimum, a higher credit score improves approval chances and may result in better interest rates and loan terms, reflecting lower risk to the lender.

Photo credit: iStock/Rockaa

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOSMB-Q425-041

Michigan has about 945,000 small business owners statewide who could apply for small business grants. Submitting an application and competing for Michigan small business grants can help you grow your small or medium-size enterprise in the Wolverine State.

Michigan’s economy had a gross domestic product around the $723 billion mark by mid-year of 2025. That’s the 14th largest GDP in the United States out of the 50 states and the District of Columbia.

Below we highlight some of the top small business grants and other resources in Michigan.

•  Michigan has approximately 945,000 small business owners statewide eligible to apply for various grant programs offered by local and state government agencies.

•  Michigan’s State Trade Expansion Program reimburses up to $15,000 for export-related expenses including international marketing and trade show participation costs for eligible businesses.

•  Match on Main grant program reimburses up to $25,000 for eligible project expenses such as interior building renovations to permanent commercial spaces in business districts.

•  Motor City Match provides gap funding grants up to $100,000 for opening new Detroit businesses and up to $25,000 for façade improvements to existing establishments.

•  Alternative funding sources include Michigan’s State Small Business Credit Initiative with $79 million available, microloans up to $50,000, and Community Development Financial Institutions.

Grants for Small Businesses in Michigan

If you’re looking for small business grants in Michigan, here are some potential options to consider:

Michigan’s State Trade Expansion Program (MI-STEP)

•  Program description: MI-STEP is a grant reimbursement program that can help you export your goods and services from the Wolverine State to foreign markets.

•  Incentive: Receive up to $15K in reimbursements for eligible business expenses, including international marketing and trade show participation costs.

•  General requirements: Here are some of the general requirements for this grant:

◦  Be a Michigan-based small business

◦  Be able to provide a Michigan Licensing and Regulatory Affairs (LARA) annual report or business structure filings from a county registrar’s office

◦  Understand how exporting works and the cost of doing business with foreign buyers

◦  Provide an employer identification number (EIN) linked to a Michigan address

◦  Be in good standing with the Michigan Department of Treasury and other regulatory agencies

◦  Be an export-ready U.S. company

◦  Have a product or service consisting of at least 51% U.S. content

◦  Minimum gross annual revenue of $100K

◦  Wholesale distributors of imported products are not eligible for MI-STEP grants

How to apply: Access and submit a completed MI-STEP grant application through the Michigan Economic Development Corporation (MEDC) Project Portal.

Match on Main Grant Program

•  Program description: Match on Main is a reimbursement grant program for eligible small businesses operating in a Michigan business district.

•  Incentive: Be reimbursed up to $25K for eligible expenses on project activities, such as the cost of making interior building renovations to a permanent commercial space.

•  General requirements: Here are some of the general requirements for this grant if you’re an eligible small business owner:

◦  Have a local government, downtown development authority, Michigan Main Street program, or other eligible organization apply on your behalf

◦  Be headquartered in Michigan

◦  Be located within a traditional downtown, historic, or mixed-use location zoned for concentrated commercial development in Michigan

◦  Sell products or services face to face as an eligible business

◦  Have a proposed project that incurs eligible expenses, such as costs for interior building renovations or electrical improvements

•  How to apply: Work with an eligible applicant who can submit a Match on Main grant application on your behalf, such as the local government where your business is based.

Michigan Workplace Improvement to Safety and Health (MIWISH) Grant Program

•  Program description: The Michigan Occupational Safety and Health Administration (MIOSHA) offers MIWISH matching grants to eligible employers who buy items that promote workplace safety.

•  Incentive: Receive up to $5,000 in matching funds to buy items and training services that help improve the safety and health of your employees.

•  General requirements: Here are some of the general requirements for this grant:

◦  Have 250 employees or less

◦  Come under the jurisdiction of MIOSHA

◦  Conduct a site-specific evaluation justifying the purchase of any safety equipment

◦  Implement a workplace safety project that reduces the risk of injury or disease to employees

•  How to apply: Complete the MIWISH grant application available online.

Motor City Match Grants

•  Program description: Motor City Match is a business assistance program that provides cash grants to eligible small business owners who need additional funding to open a new establishment in Detroit. The program can also benefit existing Detroit business owners who need additional funding to complete façade improvements.

•  Incentive: Receive gap funding grants of up to $100K to open a new business in Detroit or grants of up to $25,000 to complete façade improvements to your existing Detroit business.

•  General requirements: Here are some of the general requirements for this grant:

◦  Be a new businessperson opening your first location in Detroit, an existing business owner opening an additional location in Detroit, or an existing Detroit business owner who needs additional funding to complete façade improvements

◦  Have a clear budget on the total project costs to open a new establishment or complete façade improvements

◦  Have the ability to invest a minimum for 10% of the total project costs in your own equity

◦  Have a need for additional funding that you can’t find elsewhere

◦  Have been open and operating for at least one year if you’re seeking funding for façade improvements

•  How to apply: Access the Motor City Match grant application online and submit a completed application when the grant round opens.

City of Wayne Façade Improvement Program Grants

•   Program description: The City of Wayne Downtown Development Authority (DDA) offers Tax Increment Financing (TIF) cash grants to eligible property owners who enhance the general aesthetics of a building exterior or façade.

•   Incentive: Receive up to $10K in reimbursements for making façade improvements to an eligible property in the City of Wayne’s downtown TIF district.

•   General requirements: Here are some of the general requirements for this grant if you’re a small business owner:

◦   Own commercial property or other eligible real estate in the City of Wayne’s downtown TIF district

◦   All personal and real property taxes are paid up to date

◦   Payment of all water charges and special assessments are current

◦   Have a certificate of good standing from the state of Michigan

◦   Propose a detailed project that would improve a blighted property or help prevent deterioration in the downtown district

◦   Comply with all City of Wayne regulations, codes, and ordinances

•   How to apply: Access the City of Wayne Façade Improvement Program grant application online and submit a completed application to the City of Wayne Community Development Department.

Pure Michigan Business Connect (PMBC) Grants

The Pure Michigan Business Connect Community is a business-to-business (B2B) platform that connects Michigan companies of all sizes and industries to facilitated matchmaking opportunities.

MEDC Small Business Support Grants

The Michigan Economic Development Corporation specializes in support for the state’s businesses. One example is the Michigan Supplier Conversion Grant Program, which has allocated $31.8 million through federal funding for current small- and medium-sized manufacturers producing parts for internal combustion vehicles to retool their facilities and retrain their workforce to enter electric vehicle supply chains.

Recommended: Small Business Loans and Grants for Disabled Veterans

Who Provides Small Business Grants in Michigan?

Local and state government agencies, including the MEDC, offer a variety of small business grants in Michigan.

You can compare small business grants in Michigan with similar programs in other states, such as:

•   NJ small business grants

•   Ohio small business grants

•   Wisconsin small business grants

•   Florida small business grants

Do You Have to Pay Back a Small Business Grant?

A small business grant typically comes with terms and conditions, and you will likely be responsible for paying back the grant if you violate those terms. In general, small and midsized business owners are not required to pay back an SMB grant absent any violations.

You typically have to sign a funding agreement to accept a small business grant. As mentioned above, the grant may come with certain conditions. Using the grant for an illegitimate purpose may violate the agreement and require business owners to pay back the grant.

Small business grants may require you to spend the money by a certain date. You may also have to provide proof of payment and a written statement detailing how you’ve spent the grant.

Recommended: What to Know About Short-Term Business Loans

Who Is Eligible for Small Business Grants in Michigan?

Local business owners or operators of an enterprise with fewer than 500 employees may be eligible for small business grants in Michigan.

The U.S. Small Business Administration’s Office of Advocacy generally defines a small business as an independent business having fewer than 500 employees. A small business, including individuals who freelance, may be eligible for small business grants.

What Industries Does Michigan Support With Grants?

Michigan offers a variety of grants supporting the following industries:

•   Cannabis

•   Construction

•   Fabricated metal product manufacturing

•   Food manufacturing

•   Machinery manufacturing

•   Metal industries

•   Nonmetallic mineral product manufacturing

•   Nursing and residential care facilities

•   Plastics and rubber products manufacturing

•   Primary metal manufacturing

•   Retail trade (store and nonstore retailers)

•   Transportation equipment manufacturing

•   Wood product manufacturing

Michigan Resources for SMB Owners Looking for Funding

Here are some resources for small and medium-sized businesses looking for funding in the Wolverine State:

Michigan Small Business Development Center (SBDC)

The Michigan SBDC is a statewide program that can provide Michigan’s small business owners with the following services:

•   Webinars and workshops about running and growing your business

•   Market research

•   No-cost consulting

SBA District Office in Michigan

The U.S. Small Business Administration (SBA) is a federal agency that provides resources and support to small business owners. The SBA Michigan District Office serves the entire Wolverine State with a main office in Detroit and satellite office in Grand Rapids.

Alternative Funding Sources for Small Businesses in Michigan

Here are some alternative funding sources for small businesses in Michigan:

Michigan State Small Business Credit Initiative (SSBCI)

Michigan’s SSBCI is a federally funded program for small business owners in the Wolverine State. In early 2025, the state announced it would make $79 million available for Michigan’s small businesses.

Here’s how Michigan plans to use the SSBCI funding:

•   Michigan Small Business Venture Capital Program This program can help eligible startups access venture capital.

•   Michigan Collateral Support Program This program provides cash collateral to help small businesses qualify for small business loans.

•   Michigan Loan Participation Program This program uses SSBCI funds alongside private funds to support loans to borrowers who need financing for a diversification or expansion project in Michigan.

•   Michigan Loan Guarantee Program. This program provides lenders with short-term, partial guarantees to support loans offered to eligible borrowers, including socially and economically disadvantaged individuals who own small businesses in the Wolverine State.

•   Michigan Capital Access Program. This program uses SSBCI matching funds to support portfolio insurance on small business loans.

Michigan Microloan Lenders

Community-based nonprofits may offer microloans of up to $50,000 to small business owners in Michigan, including microloans for women-owned small businesses. In general, microloans can range from $500 to $50K and may be available to startups.

Michigan SMB Loans from Private Lenders

Banks, credit unions, and private lenders may offer different types of small business loans to Michigan business owners.

Here are some of the funding products you may consider depending on your needs:

•   Commercial real estate loans

•   Equipment financing

•   Small business loans for startups

•   Working capital lines of credit

Recommended: How to Form an LLC in Michigan

Community Development Financial Institutions (CDFIs)

Community Development Financial Institutions (CDFIs) in Michigan are mission-driven lenders and investors supporting underserved communities, offering loans for housing, businesses, and revitalization. Their goal is to provide capital where traditional banks fall short.

Use the Community Development Funding Institution (CDFI) Resource Locator to find lending partners in your area. Select a county from the drop down list to find contact information for local partners.

Recommended: Small Business Loans in Michigan

The Takeaway

Small businesses in Michigan can apply for small business grants available from government and private sources.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

How do you get a small business grant in Michigan?

You can apply for Michigan small business grants, but there’s no guarantee you’ll get approved for one. You may have to submit a grant application as a qualified small business owner to be considered for a small business grant in Michigan.

How hard is it to get a business loan in Michigan?

You may have difficulty getting a small business loan in Michigan if you have bad credit or insufficient business experience. You generally have to pay back business loans with interest.

What is the easiest SBA loan to get approved for?

There’s no guarantee you’ll get approved for any SBA loan, but SBA microloans may be one of the easier ones to get if you’re a new business owner. Startups may be eligible for SBA microloans of up to $50K. If you’re looking for a streamlined application process, SBA Express working capital loans are an option you may consider.

What types of businesses qualify for grants in Michigan?

Most types of small businesses in Michigan qualify for grants. What could help strengthen the application process is if the business meets specific criteria like being veteran-owned, women-owned, or owned by members of underrepresented groups. The mission of the business can also be critical. If your business is Research & Development or serves rural or low-income areas or provides solutions in sustainability, that could be beneficial.

Can you apply for multiple Michigan business grants at once?

In general, you can apply for multiple Michigan business grants at once, and it’s often encouraged, but you must make sure each grant funds different needs or project parts and disclose other applications to be on the safe side.

Photo credit: iStock/RgStudio

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOSMB-Q425-048