Is Personal Loan a Good Option for Funding your Business? Find out Now
When you’ve got a great profitable idea, but not finding the necessary capital to fund it can be really frustrating. It can even bring your entrepreneurship dreams to a screeching halt. You could try having an investor on board or availing a small business loan.
If nothing works, then you can try getting personal loans to fund your business. A personal loan for your business has its pitfalls as well as advantages.
Let’s begin with the upsides of choosing personal loans for your business
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Ease of Eligibility
It’s often easier to avail quick personal loans that getting small business loans. This is true especially if you’re a brand new startup. Most lenders ask you for your business plan, financial statements, and even revenue projections when you apply for small to medium business loans.
On the contrary, for personal loans, all you need to prove is your individual creditworthiness. This depends on your credit history, your qualification, current income levels, and other assets.
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No need for Collateral
This is one of the biggest advantages of personal loans. They are unsecured and you don’t need to submit any collateral. On the other hand, to avail business loans you have to put up collateral. If you have no assets right now, then personal loans work out in your favor.
Now, let’s look at some Pitfalls of Funding your Business with Personal Loans
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High-interest Rates
Though quick unsecured personal loans are an easy way to jump-start your business, they come with a hefty price tag. They have higher interest rates when compared to a small business loan. This could eat up a chunk of your profits over time.
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Loan Amount Limitations
Another big drawback of guaranteed unsecured personal loans is that the amount you can borrow is limited. If you’re looking for funds to set-up your venture from scratch, then chances are that your personal loan will not be able to cover it.
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Short Tenure
Personal loans have shorter tenure when compared to business loans and you must repay the amount within that period. This sometimes proves to be restrictive especially, when you are just starting out.
The Bottom Line
Regardless of these drawbacks, personal loans are a quick and easy way to begin operations or to cross a particular financial hurdle in your business. Most business owners, who don’t require a huge amount and have a sufficiently good credit history, opt for fast personal loans.
On the contrary, if you need huge sums of money, you can try crowdfunding or opt for small to medium business loans. If you want fast personal loan online, compare them on www.antworksmoney.com and choose the one that works for you!
