If you’re deciding to take on a $200,000 business loan, you’ll have a wide range of options, from lines of credit and term loans to SBA loans and more. This loan amount typically requires at least a couple of years in business and six figures in annual business revenue, though requirements differ between lenders. Compare providers to make sure you’re getting the most competitive rates and terms before you apply.
Most lenders offer $200,000 business loans, including banks, credit unions and online lenders. Established businesses might find more competitive rates and terms with large national banks on this size of business loan. Newer businesses may get better terms from alternative online lenders and SBA providers.
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Business loans that finance up to $200,000 for your business can cover the following:
| Type of financing | Description | Use |
|---|---|---|
| Short-term business loan | An unsecured lump sum loan with repayment terms of up to 18 months | To cover unexpected costs or to survive a downturn |
| Business term loan | An unsecured lump sum loan with repayment terms of up to 10 years | To provide working capital for more established businesses |
| Business line of credit | A revolving line of credit for ongoing expenses | To tap into funds as needed and pay off as you go |
| Merchant cash advance | A quick turnaround loan for newer businesses or those with bad credit | To borrow against your future credit card sales |
| SBA loan | A low interest small business loan partially backed by the government | To provide working capital to grow your business |
| Equipment financing | A collateralized term loan to fund equipment | To pay for any kind of equipment for your business |
| Inventory factoring/Inventory financing | A loan secured by businesses’ inventory | To free up cash tied to inventory. |
| Commercial real estate loans | Loans for purchasing property for business use | Businesses looking to buy, refinance or develop commercial property. |
| Franchise loans | Specifically for purchasing a franchise | Business owners looking to buy a new franchise. |
When considering secured versus unsecured loans, it’s important to note that secured loans require collateral, making them easier to qualify for. A secured loan requires some type of asset that can back the loan, which goes through an appraisal process.
Unsecured loans may be a challenge for those with lower credit scores to qualify for, since the lender is taking on more risk. You may also face higher interest rates. And, unsecured loans may still require a personal guarantee.
While a $200,000 business loan is below the average borrowing amount of $660,000, it may still be difficult to qualify if you recently started your business.
To qualify for a loan of this size, you typically need:
How much your loan costs weighs heavily on your creditworthiness, your business financials and what type of loan you get. Many bank loans offer rates starting around 8.5%. If you apply for an SBA loan, rates are capped at the prime rate plus 2.25% to 2.75% for most programs, depending on your loan term. However, in 2024, the SBA states that upfront fees for a loan of $1 million or less will be 0%.
Loans of this size also typically come with a term of at least a few years. Use the calculator below to find out how much your loan might cost based on different rates and terms.
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Most $200,000 loans are term loans with fixed or monthly repayments, while some short-term business loans may require more frequent repayments, such as biweekly, weekly or daily. It’s important to review the repayment terms before finalizing the loan agreement to ensure you can meet payments.
The specific repayment structure depends on the loan type and lender of your choice. Even for SBA loans, there are predetermined ceilings to which different lenders can raise interest rates, but the loan’s terms depend on the institution offering the SBA loan.
If you apply for a merchant cash advance, you’ll repay your loan with a percentage of your business’s daily sales. If you get an advance on your unpaid invoice with invoice factoring, you won’t repay the factoring company — you just won’t get your invoice’s total value.
The application process for a $200,000 loan varies by lender but generally involves the following steps:
The turnaround time for $200,000 loans is typically shorter than larger loans, with some lenders offering funding within a few business days to a week. For SBA loans, expect funding to take up to weeks.
You can opt for a $200,000 SBA loan. These loans offer low rates and higher amounts to business owners who struggle to qualify with other private lenders. But the process is very competitive, and many applicants don’t walk away with an approved loan. Usually, the higher the loan amounts, the more annual revenue you need to qualify.
You can secure $200,000 in business financing if you apply for a merchant cash advance or invoice financing — but you’ll need the revenue or unpaid invoices to support this loan amount. But prepare to pay more in fees and interest if you get a bad credit business loan.
Yes, but it is rare for startups or new businesses. Your options may be limited to SBA loans. For example, the 7(a) program requires good credit, a down payment of 10% to 30% and a solid business plan. Plus, you’ll have to offer up a personal guarantee.
Lenders such as banks, SBA lenders and online lenders may be open to working with startups seeking this amount. While some lenders may provide rapid funding, traditional banks may have a more rigorous application process and longer turnaround times. You’ll need the right documentation, such as financial statements, to support your application.
Because it can be hard to qualify for an SBA loan, some entrepreneurs use their own savings or take out a personal loan to launch a new enterprise. Personal loans don’t have a business revenue requirement or time in business requirement, making them ideal for startups — if the lender allows the funds to be used this way.
Not sure where to start? Visit our comprehensive guide to startup loans to explore your options.
To receive a $200,000 business loan, you may need several months in business as well as a good credit profile — though it’s not always required. To compare lenders and get prequalified, see our guide to the best business loans.
Think sole proprietors can’t get loans? Think again — see how to fund your business today.
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