A business loan is borrowed capital that companies apply toward expenses that they are unable to pay for themselves. Some business owners use business loans to pay for salaries and wages until their new company gets off the ground, while other companies put borrowed funds toward office supplies, inventory or business projects.

Lenders want to know how the business intends to use the borrowed monies, so business owners must make sure to have a clear outline for how the money will be spent. According to an October 2010 article by David Bangs in Entrepreneur.com, it is important to impress the lenders by being professional, or they may decline the loan application.

Businesses have a variety of loan options to choose from. Traditional bank loans are the most popular source of funding, however securing a loan from a bank is no easy task. According to a March 2010 article in Entrepreneur.com by Karin Price Mueller, banks are tightening their lending policies due to the economic downfall, making it more challenging for businesses to receive financial assistance from commercial loans.