Starting a business is an exciting time for entrepreneurs. It’s the culmination of hard work, innovation, and strategic decision-making. If there is one concern that many new entrepreneurs universally share, it would be funding their new businesses. In advance of this new beginning, many people scrimp and save to turn dreams into reality. Venture capital often gets idolized among specific industries and parts of the country, but a business loan is necessary for the average person.

A business loan provides founders and entrepreneurs with many advantages. In contrast to equity financing, business loans don’t require owners to give up any stake in their company, and depending on factors such as creditworthiness and financial institution, interest rates can be competitive.

While there are different types of business loans, most are universally flexible in terms of what the funds can be used for. Whether it’s to purchase equipment, pay suppliers, add inventory, or even pay off other debts, loans can be crucial in launching a business or accelerating growth.

Why should you consider applying for a business loan? For many new or veteran business owners, there can be more certainty in getting approved for a loan than in securing funding from other sources. Many lenders can offer more significant loans (>$100K). This can be especially favorable for businesses looking at capital-intensive expenditures. Business loans can also have more friendly terms than are often found with consumer-grade loans. 

One benefit of obtaining a business loan that often isn’t thought about is the familiarity many of us have with applying for a loan. You’ve likely taken out a loan to purchase a house or car and, in the process, have an experience that creates familiarity. Business loans may have different requirements and obligations, but the process is consistent and predictable.