Business loans can provide you with the capital to finance expansion to pay employees and pay for other expenses. Before you apply, be certain to know how these loans operate and what paperwork you’ll need to your lender. Be aware of the amount of time required to submit an application as well as any fees that might be assessed.
Common uses for business loans
A business loan may help you pay for unexpected expenses like an injured chair at work or the COVID-19 Pandemic. It is also possible to borrow money to fund an expense that is unavoidable, such as upgrading or replacing technology, purchasing manufacturing machinery, or remodeling the interior of a store. Some lenders provide credit lines that allow you to draw money according to the need. The maximum amount is set and the interest is only charged on the amount you draw.
Eligibility requirements and application process
To qualify for a business loan, you’ll typically need to provide detailed information about your company, which includes the official business name, tax ID number and financial documentation. This could include business plans, proposals, and profits and loss statements, as well as the names and Social Security numbers of those who control 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 other lenders accept startups or don’t have any time-in-business requirements.
A mentor or adviser can guide you through the process of getting a business loan. SCORE is a good example. It has a network of business mentors that provide no-cost or low-cost guidance to entrepreneurs in the early stages and small companies. You can locate a local chapter and meet an advisor in person.
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