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Business loans can provide the funds you require to purchase equipment or inventory, finance business expansion or pay employees, and also cover other costs. Before you apply, be sure to understand how these loans operate and what paperwork you’ll need to submit to your lender. Be aware of the amount of time it can take to submit an application as well as any fees that may be due.

Common uses of business loans

A business loan can help you pay for unexpected expenses, such as an office chair that is damaged or the COVID-19 pandemic. There may be times when you need to borrow money to pay for an unavoidable investment such as upgrading or replacing technology, purchasing manufacturing equipment, or transforming your store. Some lenders offer lines of credit that allow you to draw money according to your needs, with a set maximum and interest charged only on the amount used.

Application requirements and eligibility requirements

To be eligible for a commercial loan, you’ll need to provide specific details about your company, including the official name of the business as well as the tax ID number. financial documentation. This could include business plans, proposals, profits and loss statements, and the names and Social Security Numbers of those who are owners of 20-25 percent or more of the company. Some lenders require you to be in business for at least one year. Some lenders will consider startups, or do not have any deadlines.

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