Business loans can give you the capital to expand your business as well as pay employees and cover other expenses. Before you apply, be sure you understand how these loans operate and what documentation you’ll need to submit to your lender. Be aware of the time required to submit an application as well as any fees that may be to be charged.
Common uses for business loans
A business loan could help you pay for unexpected expenses, such as a damaged office chair or the COVID-19 pandemic. Alternatively, you might require financing to cover an unexpected capital expenditure, for example, replacing or upgrading technologies, purchasing manufacturing equipment or renovating a store. Some lenders offer lines of credit that allow you to draw funds when needed with a predetermined maximum and interest charged only on the amount utilized.
Application process and eligibility requirements
To qualify for a business loan, you’ll need to provide complete information about your business, including the official name of the business, tax ID number and financial documents. This could include business plans, proposals and profit and loss statements, as well as the names and Social Security numbers of those who own 20 percent to 25 percent or more of your business. Some dri*avast software paypal lenders require you to be in business for at minimum for a year. Others accept startups, or do not have any deadlines.
It is helpful to have a mentor or adviser to guide you through the process of obtaining a business loan. SCORE is a good example. It has a network of business mentors that provide free or low-cost assistance to founders of startups and small businesses. You can locate an area chapter and meet an advisor in person.