Business loans can provide the funds to expand your business or pay employees, as well as cover other expenses. Before you apply, be certain to know how these loans work and what documentation you’ll need to submit to your lender. Also, be aware of how long the application process can take and any fees you may incur.

Common uses of business loans

A business loan could help you pay for unexpected expenses, like a damaged office chair, or the COVID-19 pandemic. You might also need to borrow money to cover the cost of an investment that is not necessary such as upgrading or replacing technology, buying manufacturing equipment, or renovating the interior of a store. Some lenders provide credit lines that permit you to draw money according to the need. The maximum amount is set and interest is charged only on the amount you draw.

The application process and eligibility requirements

To be eligible for a business loan, you will typically have to provide specific information regarding your company, such as the official name of your business, tax ID number and financial documents. This could include business plans, proposals, profit and loss https://southbeachcapitaladvance.com/credit-cards-vs-merchant-cash-advances statements and the names and Social Security Numbers of those who hold 20 to 25 percent or more of your company. Some lenders require you to have been in business at least one year. Some lenders will consider startups, or do not have deadlines.

It can be helpful to get a mentor or an adviser to help you navigate the process of obtaining business loans. SCORE, for example, has an extensive network of business mentors who provide free or low-cost assistance to founders of startups and small companies. You can look up local chapters and connect with an advisor in person.