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What is a small business loan and how does it work?

Curious about Small Business Resources

What is a small business loan and how does it work?

A small business loan is a type of financing provided by a lender to a small business owner to help them cover various business expenses. Small business loans can be used for a variety of purposes, including working capital, equipment purchases, inventory financing, and more.

When a small business owner applies for a loan, the lender will evaluate their creditworthiness and the financial health of their business to determine whether or not to approve the loan. If the loan is approved, the lender will provide the funds to the business owner, usually with interest and other fees attached.

The loan must then be repaid over a specified period of time, typically with monthly payments that include both principal and interest. The terms of the loan, including interest rates, repayment periods, and other fees, can vary depending on the lender and the borrower's creditworthiness and financial history.

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