SBA Loan Limits Explained: From $50,000 to $5 Million—Can You Really Get $1 Million? 

I helped a client apply for a $1 million SBA loan in 2023. He got approved for $275,000.

Same business plan. Same financials. Same collateral. The difference? He didn't understand how SBA loan limits actually work.

Let me break down what the SBA advertises vs what you'll actually qualify for; because the gap between these two numbers is where most founders get disappointed.

What the SBA Says You Can Borrow

SBA 7(a) loans: Up to $5 million SBA 504 loans: Up to $5.5 million SBA Microloans: Up to $50,000 SBA Express loans: Up to $500,000

These are the maximums. Not what you'll qualify for.

It's like a credit card with a $50,000 limit; just because the limit exists doesn't mean the bank will approve you for it.

What You'll Actually Qualify For (The Reality)

Here's what determines your actual loan amount:

Factor 1: Debt Service Coverage Ratio (DSCR)

This is the #1 factor that killed my client's $1 million request.

Formula: Annual Cash Flow ÷ Annual Debt Payments

What lenders want: Minimum 1.25x (you generate $1.25 for every $1 of debt)

My client's numbers:

• Annual cash flow: $180,000

• Existing debt payments: $24,000/year

• Requested loan payment: $72,000/year (for $1 million at 7% over 10 years)

• Total debt payments: $96,000/year

His DSCR: $180,000 ÷ $96,000 = 1.875x

Looks good, right? Should easily qualify.

But the bank saw it differently.

They wanted to see what happens if revenue drops 20% (standard stress test).

Stressed cash flow: $144,000 Stressed DSCR: $144,000 ÷ $96,000 = 1.5x

Still above 1.25x minimum, but barely. The bank got nervous.

What they approved: $275,000

• Annual payment: ~$21,000

• Total debt payments: $45,000/year

• Stressed DSCR: $144,000 ÷ $45,000 = 3.2x

Much more comfortable for the bank.

Factor 2: Time in Business

SBA requires: Minimum 2 years in business for most programs

But here's the reality:

2 years in business: You'll qualify for smaller amounts ($50K-250K) 3-5 years: Better odds for $250K-500K 5+ years: Real shot at $500K-1M+ 10+ years: Full $5M limit becomes possible

My client had been in business for 3 years. Good, but not great.

If he'd waited until year 5 with the same financials, he probably would've gotten the full $1 million.

Factor 3: Collateral Available

SBA loans require collateral for amounts over $25,000.

What counts as collateral:

• Real estate (85% of appraised value)

• Equipment (60-80% of value)

• Inventory (50% of value)

• Accounts receivable (70-80% of value)

My client had:

• Business equipment: $150,000 → Collateral value: ~$105,000

• Inventory: $80,000 → Collateral value: ~$40,000

• No real estate

Total collateral: ~$145,000

For a $1 million loan, lenders typically want 80-100% collateral coverage. He had 14.5% coverage.

Even though SBA doesn't strictly require full collateral, banks do their own risk assessment. Insufficient collateral = smaller loan.

Factor 4: Industry Risk

Some industries are considered higher risk by lenders.

Lower risk (easier to get approved):

• Healthcare services

• Professional services (accounting, legal)

• Established retail

• Manufacturing with long-term contracts

Higher risk (harder to get full amount):

• Restaurants (50% fail in 5 years)

• Bars and nightclubs

• Startups in new markets

• Construction

My client was in construction. That alone made banks more conservative with the loan amount.

Factor 5: Personal Credit Score

Minimum for SBA loans: 680 Realistic for $500K+: 720+ Best rates and terms: 750+

My client had a 695. Not bad, but not great.

If he'd been at 750+, the bank might've been more comfortable with a higher amount.

Factor 6: Use of Funds

Lenders care what you're using the money for.

Easier to get approved:

• Equipment purchases (tangible assets)

• Real estate (secured by property)

• Refinancing existing debt (known use case)

• Working capital with clear plan

Harder to approve large amounts:

• "General working capital" (vague)

• Rapid expansion (high risk)

• Paying off owners (looks like cash-out)

My client wanted $1 million for "expansion and working capital." Too vague.

When we broke it down specifically ($400K equipment, $300K hiring, $300K marketing), he still didn't get $1 million, but the bank understood the use better.

The Real Qualification Formula

Here's my framework after seeing 50+ SBA loan applications:

To qualify for $50K-100K:

• 2+ years in business

• 650+ credit score

• Profitable last 2 years

• Basic collateral

To qualify for $100K-250K:

• 2+ years in business

• 680+ credit score

• Strong cash flow (1.5x+ DSCR)

• Some collateral

• Clear use of funds

To qualify for $250K-500K:

• 3+ years in business

• 700+ credit score

• Excellent DSCR (2x+)

• Significant collateral

• Detailed business plan

To qualify for $500K-1M:

• 5+ years in business

• 720+ credit score

• Bulletproof DSCR (2.5x+)

• Strong collateral coverage

• Lower-risk industry

• Detailed projections

To qualify for $1M-5M:

• 7+ years in business

• 750+ credit score

• Exceptional financials

• Full collateral coverage

• Established industry

• Track record of managing debt

Can you get $1 million? Yes, but you need almost everything going right.

Why Most People Overestimate Their Qualification

Reason 1: They calculate DSCR based on best-case revenue

Lenders stress-test your numbers. They assume revenue drops 20-30%.

Reason 2: They count assets at purchase price, not collateral value

$200K in equipment ≠ $200K in collateral. More like $120-140K collateral value.

Reason 3: They forget about existing debt

Your personal mortgage, car payments, and credit cards all factor in. Even if they're personal, banks want to see your total debt load.

Reason 4: They assume "up to $5 million" means available to them

The $5M limit is for the absolute strongest applications. Most approvals are in the $100K-500K range.

How to Calculate Your Realistic Loan Amount

I built a calculator after my client's disappointing experience: SBA Loan Calculator

What it factors in:

• Your actual cash flow (not revenue)

• Existing debt payments

• Time in business

• Credit score range

• Available collateral

• Industry risk level

• Intended use of funds

Why I built it: Most SBA calculators just show monthly payments. This one shows what you'll actually qualify for based on lender criteria.

My client's experience:

Before calculator: Requested $1M based on "SBA loans go up to $5M"

After calculator: Saw realistic range was $200K-350K based on his situation

Actual approval: $275,000 (right in the predicted range)

He was disappointed, but not shocked. He knew the number going in.

Real Examples from My Network

Example 1: The $500K Request That Became $150K

Owner: 2.5 years in business, 685 credit, restaurant Requested: $500,000 Approved: $150,000

Why:

• Too new (under 3 years)

• Restaurant (high-risk industry)

• Credit score below 700

• Limited collateral

Should've requested: $150-200K from the start

Example 2: The $250K Request That Got Full Approval

Owner: 6 years in business, 740 credit, accounting firm Requested: $250,000 Approved: $250,000

Why:

• Established business (6 years)

• Low-risk industry

• Excellent credit

• Strong DSCR (3.2x)

• Client receivables as collateral

Smart move: She calculated her realistic range first and requested within it.

Example 3: The $1M Request That Actually Got $1M

Owner: 10 years in business, 765 credit, manufacturing Requested: $1,000,000 Approved: $1,000,000

Why:

• Long track record

• Excellent credit

• Manufacturing equipment as collateral ($800K value)

• Long-term contracts (predictable revenue)

• DSCR over 3x

• Specific use (equipment purchase)

This is what it takes to actually get $1M.

The Loan Amount Sweet Spot

Based on approval rates I've seen:

$50K-150K: 70-80% approval rate

• Most applications fall here

• Easier requirements

• Faster processing

$150K-350K: 50-60% approval rate

• Need solid financials

• More documentation

• Longer process

$350K-750K: 30-40% approval rate

• Need excellent financials

• Significant collateral

• Very thorough review

$750K-$1M+: 10-20% approval rate

• Need nearly perfect application

• Extensive documentation

• Can take 6+ months

Most founders should aim for the $50K-350K range. That's where you have realistic odds.

How to Improve Your Qualification Amount

If you want a larger loan, here's what to work on:

Improve #1: Wait Longer

Every year in business increases your qualification amount.

2 years → 3 years: +$50-100K 3 years → 5 years: +$100-250K 5 years → 7 years: +$250-500K

Sometimes the best strategy is patience.

Improve #2: Reduce Existing Debt

Every dollar of existing debt payment you eliminate increases your DSCR and qualification amount.

My client paid off a $30K equipment loan ($500/month payment). That freed up $6,000/year in cash flow.

Impact on DSCR: Before: $180,000 ÷ $96,000 = 1.875x After: $186,000 ÷ $90,000 = 2.07x

Slightly better, and every bit helps.

Improve #3: Increase Profitable Revenue

Not just revenue; profitable revenue that shows up as cash flow.

If you're doing $1M revenue with 5% profit margin, you have $50K cash flow.

If you can get to 8% margin, that's $80K cash flow.

Impact on qualification: $50K cash flow → Qualify for ~$150-200K loan $80K cash flow → Qualify for ~$250-350K loan

Improve #4: Acquire Collateral

Buy (or lease-to-own) equipment before applying.

More collateral = higher loan amounts banks will approve.

Improve #5: Improve Credit Score

680 → 700: Opens doors to $250K+ loans 700 → 720: Opens doors to $500K+ loans 720 → 750: Opens doors to $1M+ loans

Every 20 points matters.

My Honest Take on SBA Loan Limits

Can you get $1 million? Yes, but probably not in your first SBA loan.

The realistic path:

Year 1-3: Focus on building business, not big loans Year 3-5: Apply for $150-350K if needed Year 5-7: Apply for $500K-750K with strong track record Year 7+: Apply for $1M+ if financials support it

Most founders should target $100-350K on their first SBA loan. That's where approval odds are best and you can actually qualify.

Requesting $1 million when you realistically qualify for $300K just wastes everyone's time and sets you up for disappointment.

Calculate Your Realistic Loan Amount

Don't guess at what you'll qualify for. Calculate it based on lender criteria.

SBA Loan Calculator shows:

• Your realistic qualification range

• Monthly payments at different amounts

• DSCR at various loan sizes

• How to improve your qualification

• What lenders actually look for

Takes 3 minutes. Shows you real numbers based on how lenders actually underwrite SBA loans.

Better to know your realistic range before applying than to get rejected or approved for way less than you requested.

My client wishes he'd calculated first. Would've saved him the disappointment of requesting $1M and getting $275K.

He's happy with the $275K now (growing the business steadily), but the initial rejection stung.

Have you applied for an SBA loan? What amount did you request vs get approved for?

Short Answer Version:

The limits: SBA 7(a) loans go up to $5 million.

The reality: Most approvals are $100K-350K.

Can you get $1 million? Yes, but here's what it takes:

My client tried:

• 3 years in business

• 695 credit score

• $180K annual cash flow

• Construction industry

• Limited collateral

Requested: $1,000,000 Approved: $275,000

Why: His DSCR stressed to 1.5x (bank wanted 2.5x+ for $1M), insufficient collateral, higher-risk industry, and only 3 years established.

What actually qualifies you for $1M:

• 5+ years in business (7+ is better)

• 720+ credit score (750+ is better)

• 2.5x+ DSCR even under stress test

• Significant collateral (80%+ of loan amount)

• Lower-risk industry

• Detailed business plan with clear use of funds

Realistic ranges:

$50K-150K: 2+ years, 680+ credit, 1.5x DSCR $150-350K: 3+ years, 700+ credit, 2x DSCR $350-500K: 5+ years, 720+ credit, 2.5x DSCR $500K-1M: 7+ years, 750+ credit, 3x DSCR, excellent collateral $1M-5M: 10+ years, exceptional financials, full collateral

Most founders overestimate by 2-3x.

Calculate your realistic amount: llctoolkitpro.com/sba-loan-calculator

Better to know before applying than get disappointed after.