Business loans can help you get the funds to finance expansion as well as pay employees and cover other costs. Before applying, make certain to know how these loans operate and what paperwork you’ll need to submit to your lender. Also, be aware of how long the application process could take and the fees you could incur.

Common uses of business loans

A business loan may aid in the payment of unexpected expenses like an injury to your chair at work or the COVID-19 Pandemic. There may be times when you need to borrow money to cover an expense that is unavoidable like upgrading or replacing technology, buying manufacturing equipment, or renovating the interior of a store. Some lenders offer credit lines that permit you to draw funds when needed. The maximum amount is determined and interest only accrues on the amount that is drawn.

The application process and eligibility requirements

To be eligible for a commercial loan, you’ll need to provide specific details about your business, including the official name of the business along with the tax ID number and financial documents. This could include business plans, proposals, profits and loss statements, and the names and Social Security Numbers of those who are owners of 20-25 percent or more of https://southbeachcapitaladvance.com/credit-cards-vs-merchant-cash-advances/ the company. Some lenders require that you have been in business for at least one year, while others will accept startups, or don’t have any time-inbusiness requirements.

A mentor or adviser can guide you through the process of getting a business loan. SCORE is a good example. It has an extensive network of business mentors that provide free or low-cost assistance to entrepreneurs in the early stages and small companies. You can locate a local chapter and talk to an advisor in person.