Whether you need a small business loan to start or expand your business, invest in inventory or new product development, or even to handle fluctuating cash flow, finding the money your business needs can feel daunting. That’s especially true if the amount you need is in the 6 figures plus range.
There are many options for $100k business loans available, but understanding your options and how to qualify is key to securing the best small business loan for your current needs.
Here’s what you need to know about how to get a $100K business loan.
Types of Business Loans Available
There are many types of small business loans that can get you funding to start a business, increase cash flow, or build up your inventory or equipment.
Lines of credit
Among the most popular types of small business financing for working capital needs, a line of credit can be a helpful option when you need to borrow for a very short period of time (a few months and up to a year). When you get approved for a line of credit, you get a specific amount of credit (your “credit line”) from which you can borrow the amount you need. Any amount you pay back will then become available to borrow again for as long as you have access to that line of credit.
Some lines of credit are smaller— in the $2000 to $50,000 range— but well-qualified businesses may be able to get six-figure lines of credit.
Typical requirements: good credit, time in business, sufficient revenues
If you know how much you need to borrow, and you want to make fairly predictable payments, a term loan may be an ideal choice. With a 100K term loan, for example you’d get that amount in a lump sum and pay it back over the course of several years. But some term loans can have repayment periods as long as 20—25 years. Payments are often fixed, or at least won’t fluctuate significantly.
Typical requirements: good credit, time in business, sufficient revenues
Business Credit Cards
Especially popular as a source of startup funding for new businesses that don’t yet qualify for a business loan, business credit cards can be used as a source of short-term financing. Most cards require good personal credit and sufficient income from all sources, again, making them appealing to businesses that are having trouble qualifying for other types of business financing.
You may need to get multiple business credit cards to get the total amount of financing your business needs.
Typical requirements: good personal credit, sufficient income from all sources (not just the business)
Commercial Real Estate Loans
If your reason for borrowing involves investing in space for your business (a storefront, restaurant, commercial facility etc.) then a commercial real estate loan is likely on your radar. With this type of financing, a 100K loan is likely small, not large, and the property helps serve as collateral for the loan.
Typical requirements: good credit, sufficient income to service the debt, collateral
If your business is hitting walls when it comes to getting financing or investors, you may consider crowdfunding. The main types of crowdfunding for small business include rewards-based crowdfunding, loan-based crowdfunding, and investment-based (or equity) crowdfunding. Amounts range significantly but 100K crowdfunding campaigns are not out of the norm.
Typical requirements: very flexible. Credit checks are rare, and time in business or business revenue may not be important if the idea and marketing are sufficient.
Equipment Financing or Leasing
Whether it’s a specialized piece of equipment for a landscaping business, or IT equipment for a consulting firm, equipment loans or leasing can help preserve cash flow. There may be lucrative tax deductions you can take advantage of as well.
Typical requirements: more flexible than other loans, but may require fair to good credit, time in business, sufficient revenues.
Invoice Factoring or Financing
Businesses that invoice other businesses but get paid slowly often turn to Invoice factoring or financing to improve cash flow. With factoring, you sell or assign your invoices to another company at a discounted rate in exchange for cash now. The third party company then collects the invoiced amount from the company that owes you money. Another form of this involves using invoices to underwrite financing.
Because this type of financing involves a percentage of outstanding invoices, you’ll need more than six figures in outstanding invoices in order to get at least $100,000 in financing.
Typical requirements: outstanding invoices from customers with good credit.
Merchant Cash Advance
A business that has strong credit and debit card sales may leverage those for immediate cash with merchant cash advances or business cash advances. This type of financing advances a percentage of funds against future sales based on past sales history. Weekly or even daily payments are often required and the cost (as a factor rate) may be pricey.
As with invoice factoring, businesses typically qualify for a percentage of their average monthly sales so they will need to have average monthly sales that exceed $100K in order to get that much in financing.
Typical requirements: good credit not usually required. Must have sufficient sales to qualify for an advance.
The U.S. Small Business Administration has an extensive SBA loan program where they guarantee loans made by lenders approved by the SBA. These include 7(a) loans, Express Loans, Export Loans, and CDC 504 loans. You’ll apply through an approved lender, not the SBA. For many of these programs a $100K loan is not a huge amount, but you will need good to excellent credit to qualify and the application process can be quite involved. They offer competitive interest rates and usually offer affordable monthly payments.
Typical requirements: good credit, time in business varies (start up loans offered), and sufficient revenues or projections to meet revenue requirements.
Here’s everything you need to know about small business loans and how to qualify.
The Best Business Loan Options for $100K
Finding financing options that offer $100K can be tricky. But you’ll be happy to hear that there are many types of loans that offer this lump sum.
Here are a few loan options we recommend:
How to Qualify for a $100K Business Loan
To qualify for a small business loan, your business will typically need to meet at least two of the following criteria:
- Good credit. Strong personal and/or business credit scores can help you qualify for financing options where lenders require strong credit (not all do).
- Strong financials. Sufficient income and strong cash flow are requirements for financing where revenues is the main qualifier.
- Established history. Most lenders prefer at least two years in business and sometimes more.
Step-By-Step Guide To The Loan Application Process
Applying for a loan as a small business owner may feel overwhelming at first, but it’s not that different from applying for a consumer loan. To increase your chances of getting business loans for 100K, follow these 6 steps:
1. Check Your Credit
When deciding whether or not you meet eligibility requirements, a business lender will likely look at your credit history. They may look at both a personal credit score and business credit score, depending on its requirements. Some lenders will publish their minimum credit score requirements, so you know ahead of time whether you’re in the ballpark.
Whether you have bad credit or good credit may help lenders decide whether you get the funding, and it can also influence the interest rate you receive. Typically, good credit scores mean you appear more likely to pay your debts, which can help lock in lower interest rates. Don’t miss Nav’s guide on how to establish business credit for everything you need to know on this subject.
If you don’t have good credit, you’ll need to investigate small business loans for bad credit.
2. Choose the Type of Loan
Use the list above to understand which types of loans may be the best fit for your business and qualifications.
Nav makes it easy to find the right loan and lender. You can view your top financial options from 160+ trusted loans and credit cards based on your business data.
3. Find the Best Lender
Choosing a lender can feel just as tricky as choosing the type of loan. Every lender has different criteria, and types of loans they prefer to make.
Generally speaking, traditional banks (and some credit unions) often offer business funding like term loans, business lines of credit, or Small Business Administration (SBA) loans. However, keep in mind that bank loan applications can come with strict requirements and take weeks or more for approval. You’ll usually need strong qualifications to get approved when you do, you’ll likely get a loan with low interest rate when compared to other options.
On the other hand, alternative and online lenders often have faster online application processes. These lenders can provide similar types of loans, though you may end up with a higher interest rate than a bank loan. You can also look into business credit cards to fill in cash flow gaps and get fast funding.
Always check to make sure the lender makes loans for 100K or more. If the maximum loan amount is $25,000, that may not be as helpful as a larger loan in reaching your six-figure goal.
4. Gather Your Documents
Business lenders usually state on their websites which financial or legal documents you need to submit when you apply. It’s very common for lenders to ask for copies of business bank account statements or to ask to link to your business bank account to review financial information.
Some loans (especially bank loans and/or SBA loans) require more involved financial information, such as copies of financial statements or tax returns. Check with each lender to see what they need from you before you apply.
Other documents you may need may include:
- Copy of your business formation documents (such as an LLC operating agreement)
- Copy of your business license
- Your EIN
- Business lease (if you rent space)
Most lenders do not require a business plan, but a few do—especially for larger loans. It certainly doesn’t hurt to create or update yours. At a minimum it will help you understand how much you need to qualify. If you need help putting your business plan together, take a look at Nav’s guide on how to write a business plan.
5. Provide Proof of Collateral (If Needed)
Some loans (but not all) require you to pledge collateral. These loans are called secured loans. Whether or not you qualify for a secured or unsecured business loan depends on factors like your credit scores and your business income. If you do need to offer collateral, the lender will require information to demonstrate that you own the collateral and to determine how much its worth. Collateral also typically involves a UCC filing.
Loans without collateral may require a personal guarantee.
6. Submit Your Application
Submit your application to find out if you are approved or denied. The lender may request additional information from you. If so, be sure to respond quickly.
How Long Does It Take To Get Approved For A $100k Business Loan?
How long it takes to get approved and funded for a business loan depends on the type of loan you’re getting. Most online lenders, as well as those offering cash advances and invoice factoring can often make a decision within hours.
Business credit cards are often approved in seconds though it can take ten business days or longer to get your card once approved.
Commercial real estate, crowdfunding, bank loans and SBA loans tend to take longer: a month or more is not uncommon.
How Much Money Do You Need for a 100k Business Loan?
A lender wants to make sure you can repay the debt and it will rely on information to help convince it you can. If business financials are the main criteria the lender uses to decide if you qualify, it will often want to see average monthly revenues of at least 1.5 to 2 times the amount you are going to borrow.
Some lenders will review your business debt-service-coverage ratio to determine if you make enough income to cover new debt payments.
And some lenders want collateral or a down payment. Whether or not you need to provide a down payment depends on factors like:
Whether or not you need to provide a down payment depends on factors like:
- The type of funding. Business lines of credit and short-term loans typically don’t require down payments, but many SBA loans do.
- The loan amount. Lenders may require you to put down a percentage of the total amount of the loan as a down payment, like on a mortgage.
- Your business’s annual revenue and financial details. The more capable of repaying your debts, the less likely you are to find high down payment or collateral requirements.
- How you’ll use the loan. The purpose of the loan is often factored into whether or not you’ll need cash upfront before borrowing.
These factors can also influence your loan payments and repayment terms. If you are a strong lending candidate, you may get a lower annual percentage rate (APR) and be required to pay less each month.
Can a Startup Get Approved for a $100,000 Business Loan?
Start up business loans are among the toughest to get, mainly because your business has no track record. If you are just starting out, you’ll likely need to get creative. You may need to piece together different types of funding to get what you need.
How Much Interest Will I Pay on a $100k Business Loan?
That all depends on the rate your business is approved for. The lower your Annual Percentage Rate (APR) or factor rate, the less you’ll pay. Fees on small business loans are also common, though, and will add to your total cost.
In many cases the length of time you take to pay back the financing will also affect how much you pay. With most (but not all) business financing, paying it back faster lowers your cost. Nav’s Business Loan Calculators can help you understand your costs.
This article was originally written on June 30, 2022 and updated on May 11, 2023.