If you need funds to help your business grow or expand, a business loan could offer the solution you need. These types of loans are specially designed for when you want money to expand your business, but many people don’t understand how they work and decide to not bother. If you want to find out how business loans work and which one is the right one for you, read on!
What are business loans?
These types of loans allow people to borrow money for their business, instead of lending money for personal uses. With a business loan, you can often borrow between one thousand and 3 million dollars, and you’re typically required to pay the money back anywhere between a month and 15 years.
There are also quite a few varying kinds of business loans which you could apply for, but they fall into two separate groups, known as unsecured and secured loans.
Unsecured and secured loans
A secured loan lets you borrow money for your business using an asset as security, so if you don’t pay back what you owe in time, the lender can sell your assets to get their money back.
An unsecured loan however, lets you borrow money for your business without running the risk of your assets being used as security.
What businesses can apply for a loan?
Many different businesses can get loans of varied types, but you may not be able to apply for all of them depending on your specific needs. For example, a government start up loan is only available to new businesses, but there are many others that require your business to be running for a set period of time before you can apply.
What could a business loan be used for and how many can a business have?
Well, a loan can be acquired for pretty much anything that your business needs; such as for buying stock, hiring new staff, getting new equipment – or anything else that you may need money for.
Your business can have as many loans as you wish to take out, so you don’t need to worry about any set limitations. However, you will often be required to have proof that your business will be able to afford the loan when you apply, as a bank or lender will want assurance that you are a viable borrower. Demonstrating that you have the means to pay back a loan is the first step in securing the finances you need.