Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Aug 7, 2012

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Small business loans are perfect for funding purchases that are necessary to begin generating profit. That means business loans can be used for virtually anything, and those uses will vary wildly depending on the market one’s industry is in.

Some of the more popular uses for business loans include the following:

  • Equipment
  • Inventory
  • Expansion
  • Employee Payment

While not every company needs capital for each of these categories, most companies will find they need financing for at least one of these items.

Equipment: A Fledgling Business’s Foundation

For many businesses, equipment is necessary to produce the goods or services that a company is designed to provide.

For instance, a pizza parlor must have large pizza ovens if it hopes to succeed. Similarly, a tailor or seamstress must have industrial-grade sewing machines in order to satisfy their market.

Unfortunately, the initial funds to pay for the purchase of necessary equipment aren’t always available—and that’s where small business loans for equipment come into play.

Most equipment financing can be acquired in as little as a few business days and can be repaid over the course of six to 18 months.

Without Inventory, What Will You Sell?

For those who profit by selling goods, having those goods in stock is an absolute necessity. But before you begin selling those goods and turning a profit, how will you pay for their production?

Business loans can be used to purchase inventory and provide a company with the necessary goods to sell to clients. It’s important that entrepreneurs have a well-formulated plan for selling that inventory though. If a product fails to sell, then owners may be stuck with a large looming debt over their shoulders.

Expand to Become More Profitable

Entrepreneurs who are looking to expand their already successful business may need that extra surge of cash to get their expansion off the ground.

If a company owner has a clear business plan, they can qualify for a business loan and obtain large amounts of cash in a matter of days.

Then once their enterprise has expanded, an owner should have little to no difficulty generating an appropriate profit to repay their lender.

Pay Employees’ Wages

Finally, for those whose ideas provide services instead of goods, paying employees to facilitate those services is crucial.

A small business loan can be used to pay employee’s salaries, but the owner using his or her financing for this purpose should have a clear and definitive plan to turn employees’ work into profit.