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 A small business loan is a loan that provides financial assistance to a small business. The precise definition of "small business" varies, depending on the agency that defines it. Some define a small business as having a set number of employees, while others focus on annual income or business practices when formulating a definition. Small business loans are important tools for those who operate small businesses.

There are different types of small business loans. Some are designed for new businesses, in which case they are often unsecured, as loan applicants have nothing to pledge as collateral. In other instances, new business loans can be issued to people who are willing to pay back the loan along with their home or any other large asset. In some countries, government agencies help startups by providing insurance for unsecured small business loans, so people can access startup capital.

Other small business loans are designed for businesses that are already established. Loans can be taken for renovated facilities, purchase of the real estate, expansion, investment in new equipment, or stock inventory. For example, a business may take out a loan to stock inventory in advance of the holiday season, relying on holiday sales to pay off the loan.

Small business loans can also provide working capital to businesses that need more cash flow. They are used for crises like getting payroll on the spot or duplicating unexpected expenses. Since many nations support the idea of ​​small businesses and want to encourage their citizens to start and manage their own businesses, it is sometimes possible to obtain a small business loan that is funded by a government agency. is issued, usually with a low-interest rate and favorable repayment terms.

Getting a small business loan can be difficult, as many lenders consider small businesses to be risky borrowers. It may help to work with a bank you already have, as your track record as an individual may be considered when the bank evaluates the loan application.

 Government agencies may be able to provide tips or assistance with applying for small business loans. Others turn to private individuals and companies for startup loans, relying on these investors to get their business going.

A good resource for information on a small business loan is the local small business association or chamber of commerce. While employees at these organizations may not offer loans, they can point people in the right direction to get started with the application process.