What You Need to Know About Business Loans Business loans can provide the capital to expand your business, pay employees, and cover other expenses. Before you apply, be sure to understand how these loans operate and what documentation you’ll need to your lender. Also, be aware of how long the process can take and any click to find out more costs you may be charged. Common uses for business loans A business loan can help cover unexpected expenses, such as a damaged office chair, or the COVID-19 pandemic. Additionally, you may need to borrow funds to cover an unavoidable capital expenditure, like upgrading or replacing technology, buying manufacturing equipment or renovating a store. Some lenders offer lines of credit that allow you to draw funds according to your needs, with a set maximum and interest only charged on the amount that is used. 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 name of your company as well as tax ID numbers and financial documents. These could include business plans, proposals and profit and loss statements as well as the names and Social Security numbers of those who control 20% to 25% or more of your business. Some lenders require you to have been in business for at least one year. Others are open to startups, or do not have any time limits. It is beneficial to have a mentor or adviser to help you navigate the process of getting a business loan. SCORE, for example, has an extensive network of business mentors who provide free or low-cost advice to startup founders and small companies. Find a local chapter and meet an advisor in person.
