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

Common uses of business loans

A business loan can assist you in paying for unexpected expenses like the damage to your workplace chair or the COVID-19 Pandemic. You might also need to borrow money to cover an unavoidable investment like upgrading or replacing technology, buying manufacturing equipment, or transforming a store. Some lenders offer credit lines that allow you to draw funds according to your needs, with a set maximum and interest charged only on the amount you use.

Eligibility requirements and application process

To be eligible for a commercial loan, you will typically have to provide complete information about your business, including the name of your company, tax ID number and financial documents. This might include business plans, proposals and statements of profits and losses and the names and Social Security numbers of those who own 20 percent to 25 percent or more of your business. Some lenders require that you https://southbeachcapitaladvance.com/credit-cards-vs-merchant-cash-advances/ have been in business for at least one year, while some are open to startups or do not have any time-in business requirements.

It is helpful to have a guide or mentor to help you navigate the process of obtaining business loans. Organisations like SCORE have a network of volunteer business mentors who offer low- or no-cost advice for startups and small business founders. Find an area chapter and meet an advisor in person.