Business loans can give you the money to expand your business as well as pay employees and pay for other expenses. Before you apply, be sure to understand how these loans operate and what paperwork you will need to provide to your lender. Be aware of how long the procedure can take as well as any costs you may be charged.
Common uses for business loans
A business loan can be used to cover unexpected expenses, like a damaged office chair, or the COVID-19 pandemic. You may also need to borrow funds to cover an unexpected capital expenditure, such as replacing or upgrading technology, purchasing manufacturing equipment or re-designing a retail shop. Some lenders offer credit lines that allow you to draw money when needed with a maximum limit and interest charged only on the amount you use.
Application requirements and eligibility requirements
You’ll need to provide detailed details about your business, such as the official name of your company along with its tax ID and any financial documents. These could include business plans, proposals, and profits and loss statements and the names and Social Security numbers of those who hold 20% to 25% or more of your company. Some lenders require that you’ve been in business for at least one year, while other lenders allow startups and don’t have any time-inbusiness requirements.
It can be beneficial to have a guide or mentor to guide you through the process of obtaining a business loan. Organizations such as SCORE have a network of volunteer business mentors that provide free or minimally-cost guidance to startups and small-sized businesses founders. It is possible to search for local chapters to meet with an advisor in person.
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