It is almost a herculean task to get approved for startup funding when your business is in its initial stage. But the current state of the business is not a concern because personal loans are given to individuals. The best personal loan lender is going to consider your creditworthiness and if you can repay it.
Of course, there are going to be some eligibility criteria, but you don’t have to give a business plan to get approved for a business loan.
Personal loan for business
If you want to get a personal loan for business, it is going to focus on your credit as an individual. The rules are a bit different than that of business requirements. You could think about getting a secured personal loan, and providing collateral with a personal loan is less likely with a business loan.
You can use personal loans for any legitimate reason, which includes investing in the business. You have to pay attention to the conditions they come with. It is your name that is attached to the loan. Not your business name. Any mistakes could be translated into a personal liability.
FAQs for Personal Loans for Business
What is the limit that I can borrow?
You can borrow up to $50,000
What are the interest rates?
Depending on your credit score, you can expect rates to range from 4% to 36%.
What is the duration of a typical loan term?
A typical loan term goes on for 1 to 5 years.
How long would it take to get the loan proceeds?
Sometimes as fast as one business day.
Qualification Requirements for Business Loan
You need to have a good credit score of 680 or above to ace a personal loan. You can even use a personal loan calculator to get an idea of your personal loan monthly payments. The application process is fairly easy as well. You need to submit your personal information and financial details with the application. How long it takes to approve depends on your lender.
4 Handy Tips to Help You Out with Personal Loan
Here are a few tips to help you out with personal loan:
- Pay attention to efficiency. Consider how much money and time you could save with each purchase when thinking of spending loan funds.
- It is alright to go secondhand. Some equipment is built for a lasting period and does not need more than a few repairs. Some have a longer life than newer versions. So, you can choose a secondhand option for business too.
- Make use of your personal loans to take advantage of wholesale rates. Build a relationship with wholesalers so you can save on costs and get perks of wholesaler deals.
- Pay attention to marketing. You have to make your product known to your customers. So, invest in a marketing plan.
Other options for business loans
There are some other alternatives to business loans that you can consider:
Bootstrapping: If you are in a state where you could save the money you need for your business and then fund your business with it, you might not need financing.
Small Business Competitions: You can use help from schools, businesses, and local organizations – small business competitions that demonstrate different niches and industries.
Credit Cards: Another option could be personal and business credit cards, especially if you want to buy something big.
Grants: There are many private and federal grants available for businesses and business owners, particularly minorities, women, and veterans.
Investors: Venture capital and angel investors could offer you financing in return for a portion of your business. This funding comes with its set of risks and rewards, so it is ideal to use it along with a personal loan for business.
Depending on your personal circumstances and business conditions, personal loans come with a variety of benefits. Small business owners and startups, who require a few thousand dollars for business, can easily qualify for a personal loan. Personal loans are ideal for business expansion compared/combined with other options.