Business loans can provide the money you need to purchase inventory or equipment, finance business expansion or pay employees, and also cover other expenses. Before applying, make sure you understand how loans work and what kind of documentation you’ll need to submit to your lender. Be aware of the length of time it can take to complete an application and any fees charged.

Common uses of business loans

A business loan can help cover unexpected expenses, like an office chair that is damaged or the COVID-19 pandemic. It is also possible to borrow money to cover an unavoidable expense like upgrading or replacing technology, purchasing manufacturing equipment, or renovating your store. Some lenders offer credit lines which allow you to borrow funds when needed and with a limit and interest charged only on the amount that is used.

The application process and eligibility requirements

In order to be eligible for a loan, you will typically have to provide specific information about your business, including the official business name, tax ID number and financial documents. This could include business plans such as proposals, profit and loss statements and the names and Social Security Numbers of those who hold 20 to 25 percent or more of your firm. Some lenders require that you be in business for at minimum for a year. Others are open to startups, or do not have any time-frame requirements.

A mentor or advisor can help you navigate the process of obtaining a business loan. SCORE is a good example. It has an extensive network of business mentors who offer advice for free or at a low cost to startup southbeachcapitaladvance.com founders and small businesses. You can locate an area chapter and meet an advisor in person.