What You Need to Know About Business Loans

Business loans can provide the money you need to purchase inventory or equipment to finance business expansion pay employees and cover other costs. Before you apply, be sure to understand how these loans work and what documents you’ll need to submit to your lender. Also, be aware of how long the application procedure can take as well as any fees you could incur.

Common uses of business loans

A business loan can help you cover unexpected expenses, such as a damaged office chair, or the COVID-19 pandemic. It is also possible to borrow money to cover an unavoidable expense such as upgrading or replacing technology, buying manufacturing machinery, or remodeling the store. Some lenders offer credit lines that let you draw funding when needed with a maximum limit and interest charged only on the amount that is used.

Application requirements and eligibility requirements

To be eligible for a commercial loan, you’ll need to provide specific details about your business, including the official business name as well as tax ID numbers and financial documents. This could include business plans including proposals, profit and loss statements and the names and Social Security Numbers of those who own 20 to 25 percent important site or more of your firm. Some lenders require you to have been in business for at minimum for a year. Some lenders will consider startups, or do not have time limits.

It can be helpful to have a mentor or adviser to guide you through the process of obtaining business loans. SCORE is one example. has a network of business mentors who provide free or low-cost assistance for entrepreneurs who are starting their own companies. It is possible to search for local chapters to meet with an advisor in person.