Business loans can help you get the capital you need to purchase equipment or inventory to finance business expansion as well as pay employees and pay other costs. Before you apply, be sure you understand how these loans operate and what documentation you’ll need to submit to your lender. Be aware of the amount of time it takes to complete your application and any fees that may be due.
Common uses for business loans
A business loan can help cover unexpected expenses, like an office chair that is damaged or the COVID-19 pandemic. It is also possible to borrow funds to finance an unavoidable expense like upgrading or replacing technology, buying manufacturing equipment, or renovating the store. Some lenders offer lines of credit that allow you to draw money as needed with a maximum limit and interest only charged on the amount you use.
Application process and eligibility requirements
You’ll need to provide detailed details regarding your business, such as the official name of your business, its tax ID number, and any financial documents. This could include business plans or proposals, as well as statements of profit and loss and the names and Social Security Numbers of https://southbeachcapitaladvance.com/credit-cards-vs-merchant-cash-advance those who are owners of 20-25 percent or more of your business. Some lenders require that you’ve been in business for at least one year, while other lenders accept startups or don’t have any time-inbusiness requirements.
It is helpful to have a guide or mentor to help you navigate the process of obtaining a business loan. SCORE for instance, has a network of business mentors who provide no-cost or low-cost guidance to startup founders and small businesses. You can search for an area-based chapter to connect with an advisor in person.