Business loans can help you get the money to expand your business to pay employees and pay for other expenses. Before applying, make sure you understand how loans work and what kind of documents you’ll need submit to your lender. Also, be aware of how long the application procedure can take as well as any fees you may incur.
Common uses for business loans
A business loan may help you pay for unexpected expenses such as an injury to your chair at work or the COVID-19 Pandemic. It is also possible to borrow money to cover an unavoidable investment like upgrading or replacing technology, purchasing manufacturing equipment, or transforming a store. Some lenders provide credit lines that allow you to draw funds as needed. The maximum amount is set and interest is only charged on the amount drawn.
Application requirements and eligibility requirements
You will have to provide precise information about your business, such as the official name of your company as well as its tax ID number and any financial records. 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 that you’ve been in business for a minimum of one year, while some are open to startups or don’t have any time-in-business requirements.
It is helpful to have a mentor or advisor to help you navigate the business loan process. SCORE, for example, has a network of business mentors who offer free or low-cost advice to startup founders and small companies. You can locate a local chapter and meet an advisor in person.
