Business loans can provide you with the money to finance expansion or pay employees, as well as pay for other expenses. Before you apply, be sure you know how these loans work and what kind of documents you’ll need submit to your lender. Be aware of the amount of time it takes to submit an application as well as any fees you might be due.
Common uses of business loans
A business loan could help you browse around this site cover unexpected expenses, such as an office chair that is damaged or the COVID-19 pandemic. You may also require borrowing money to cover an unexpected capital expenditure, such as upgrading or replacing technology, buying manufacturing equipment or renovating a retail store. Some lenders offer credit lines that allow you to draw funds as needed. The maximum amount can be set, and interest only accrues on the amount drained.
The application process and eligibility requirements
You will be required to provide specific information about your company including the official name of your company along with its tax ID and any financial records. This may include business plans, proposals, and profits 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 business. Some lenders require that you have been in business for at least one year. Some lenders will consider startups, or do not have any time limits.
A mentor or advisor can guide you through the business loan process. SCORE for instance, has an extensive network of business mentors who provide free or low-cost advice to startup founders and small businesses. It is possible to search for a local chapter to connect with an advisor in person.
