Business loans can provide you with the money you need to purchase inventory or equipment for business expansion, finance business expansion pay employees and cover other expenses. Before you apply, be certain to know how these loans operate and what documentation you will need to provide to your lender. Be aware of the amount of time required to complete your application, as well as any fees assessed.
Common uses for business loans
A business loan can aid in the payment of unexpected expenses like the damage to your workplace chair or the COVID-19 click for more Pandemic. Additionally, you may require borrowing funds to cover an unexpected capital expense, like upgrading or replacing technology, purchasing equipment for manufacturing or remodeling a retail store. Some lenders offer credit lines that allow you to draw funds when needed, with a set maximum and interest charged only on the amount that is used.
Eligibility requirements and application process
You’ll be required to provide specific information about your business including the official name of your company, its tax ID number, and any financial documents. These could include business plans, proposals, and profit and loss statements, as well as the names and Social Security numbers of those who own 20 percent to 25 percent or more of your company. Some lenders require you to have been in business at minimum for a year. Others accept startups, or do not have time limits.
A mentor or advisor can guide you through the process of obtaining a business loan. SCORE, for example, has a network of business mentors who provide free or low-cost advice to founders of startups and small companies. You can find an area-based chapter to connect with an advisor in person.