Business loans can provide you with the capital to expand your business to pay employees and cover other expenses. Before you apply, make sure you understand how loans work and what kind of documents you’ll need provide to your lender. Be aware of the length of time it can take to submit an application as well as any fees to be charged.
A business loan can be used to cover 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 fund an unavoidable investment, such as upgrading or replacing technology, purchasing manufacturing equipment, or transforming the store. Some lenders offer credit lines that let you draw funding as needed with a predetermined maximum and interest charged only on the amount that is used.
To be eligible for a business loan, you will typically have to provide detailed information about your company, which includes the official business name, tax ID number and financial documentation. This could include business plans or proposals, as well as profits and loss statements, and the names and Social Security Numbers of those who control 20 to 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 time-frame requirements.
It can be helpful to get a mentor or an adviser to help you navigate the business loan process. SCORE is one example. has an extensive network of business mentors who offer free or low-cost advice to founders of startups and small businesses. You can find an area chapter and meet an advisor in person.
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