Business loans can help you get the funds to expand your business, pay employees, and pay for other expenses. Before applying, make sure you are aware of how loans work and what type of documentation you’ll need to provide to your lender. Also, be aware of how long the process could take and the fees you could incur.
Common uses for business loans
A business loan may aid in the payment of unexpected expenses such as the damage to your workplace chair or the COVID-19 pandemic. Additionally, you may need to borrow funds to pay for an unavoidable capital expenditure, like replacing or upgrading technologies, purchasing manufacturing equipment or re-designing a retail shop. Some lenders offer credit lines which allow you to borrow funds whenever you need it with a predetermined maximum and interest charged only on the amount you use.
Application process and eligibility requirements
You’ll have to provide precise information about your business, such as the official name of your business and its tax ID number as well as any financial documents. This could include business plans such as proposals, profit and loss statements and the names and Social Security Numbers of those who own 20-25 percent or more of your company. Some lenders require that you be in business for important site at least one year. Some lenders will consider startups, or do not have time requirements.
It is beneficial to have a mentor or adviser to guide you through the process of getting a business loan. SCORE for instance, has an extensive network of business mentors who offer advice for free or at a low cost to founders of startups and small companies. You can search for local chapters and connect with an advisor in person.
