What You Need to Know About Business Loans

Business loans can provide you with the money to expand your business or pay employees, as well as pay for other expenses. Before you apply, be sure you are aware of how loans work and what kind of documents you’ll need provide to your lender. Be aware of how long the process will take and any fees you may incur.

Common uses for business loans

A business loan could help you cover unexpected expenses, such as an office chair that is damaged or the COVID-19 pandemic. You may also need to borrow funds to cover an unavoidable capital expenditure, like replacing or upgrading technology, purchasing manufacturing equipment or remodeling a retail store. Some lenders offer credit lines that allow you to draw money according to your needs and with a limit and interest charged only on the amount you use.

Eligibility requirements and application process

To qualify for a business loan, you’ll need to provide complete information regarding your company, such as the official name of your business, tax ID number and financial documents. This could include business plans or proposals, as well as profits and loss statements, and the names and Social Security Numbers of those who hold 20 to 25 percent or more of your company. Some lenders require you to have been in business at minimum for a year. Others will accept startups or do not have any time-frame requirements.

It is helpful to have a guide or mentor to help you navigate the process of getting a business loan. SCORE is one example. has an extensive network of business mentors who offer advice for free or at a low cost to founders of startups and small businesses. You can locate local chapters and meet an advisor in person.

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