Business loans can give you the capital you need to purchase equipment or inventory to finance business expansion pay employees and cover other costs. Before applying, make sure you know how these loans work and what type of documentation you’ll need to provide to your lender. Be aware of the amount of time it can take to complete an application and any fees assessed.
Common uses of business loans
A business loan could help you pay for unexpected expenses, such as a damaged office chair, or the COVID-19 pandemic. Additionally, you may need to borrow funds to cover an unavoidable capital expenditure, for example, replacing or https://southbeachcapitaladvance.com/credit-cards-vs-merchant-cash-advance upgrading technology, purchasing equipment for manufacturing or renovating a store. Some lenders offer lines of credit which allow you to borrow funds according to your needs with a predetermined maximum and interest charged only on the amount used.
The application process and eligibility requirements
To be eligible for a commercial loan, you’ll typically need to provide specific details about your company, which includes the official name of the business as well as tax ID numbers and financial documentation. This could include business plans including proposals, profit and loss statements and the names and Social Security Numbers of those who hold 20 to 25 percent or more of the company. Some lenders require that you’ve been in business for at least one year, while some will accept startups, or do not have any time-in-business requirements.
It is helpful to have a mentor or adviser to help you navigate the process of getting a business loan. SCORE, for example, has a network of business mentors that provide free or low-cost advice for entrepreneurs who are starting their own businesses. You can locate a local chapter and talk to an advisor in person.