What You Need to Know About Business Loans

Business loans can give you the funds needed to expand your business, 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 submit to your lender. Be aware of the time it takes to complete an application and any fees that might be due.

Common uses for business loans

A business loan could help you cover unexpected expenses, like a damaged office chair, or the COVID-19 pandemic. You may 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 your store. Some lenders offer credit lines that permit you to draw money as needed. The maximum amount is determined and interest only accrues on the amount drained.

Eligibility requirements and application process

To be eligible for a commercial loan, you typically need to provide specific information about your company, including the official name of your business as well as the tax ID number. financial documents. This could include business plans or proposals, as well as statements of profit and https://southbeachcapitaladvance.com/how-do-student-credit-cards-work loss and the names and Social Security Numbers of those who are owners of 20 to 25 percent or more of your company. Some lenders require that you have been in business for a minimum of one year, while others are open to startups or don’t have any time-inbusiness requirements.

It is beneficial to have a guide or mentor to help you navigate the process of obtaining business loans. Organizations such as SCORE have a network of volunteer business mentors that provide free or low-cost advice for startups and small business founders. You can find local chapters and meet an advisor in person.