A business loan is money borrowed by a person or company to start, operate, or expand a business, which must be repaid over time with interest.

Businesses use these loans to finance operations, purchase equipment, or grow their activities.

🏢 Common Uses of Business Loans

• Starting a new business

• Expanding an existing business

• Buying equipment or machinery

• Purchasing inventory or stock

• Hiring employees

• Managing cash flow

• Opening new branches

💰 Key Components

• Principal – The amount borrowed

• Interest – The cost of borrowing

• Loan term – The repayment period (months or years)

• Repayment schedule – Monthly, quarterly, or custom payments

• Collateral – Assets pledged to secure the loan (sometimes required)

📌 Example

A small company wants to expand and needs $50,000.

• The bank approves a $50,000 business loan

• The company uses the funds to buy equipment and inventory

• The company repays the loan with interest over 5 years