People use personal loans for a variety of reasons, such as debt consolidation, paying off medical debt, or expensive car repairs.
But there’s something else the average consumer should know: A personal loan can be used for your small business.
Despite the label, a personal loan could be just what it takes to keep your business going. The personal microcredit can be used for certain expenses such as:
• Inventory
• Equipment (things like printers, tools, photocopiers, manufacturing equipment, cubicles, etc.)
• Office space (either to buy or rent)
• Marketing and advertising (digital, promotions, print, etc.)
For any type of business expense, if your business doesn’t have the additional capital but needs cash to grow, then a personal microloan is a feasible option.
Small Business Loan Vs. personal loan
Most small businesses that require the necessary funds to grow their business generally seek out a small business loan. This makes sense since a small business loan is generally beneficial to the small business owner.
In certain situations, the small business loan helps the business owner purchase expensive items such as equipment, inventory, or raw materials. However, the fact that the small business loan is the industry standard does not always make it the right solution.
The biggest problem with a small business loan is the stringent requirements. Not only is this true with the eligibility requirements, but it also comes into play during the application process. Here are some of the biggest challenges:
• Long application process that can consume hours of your valuable time
• Documentation requirements, such as providing a business plan, tax returns, references, and financial data
• It can take a long time to receive the funds (even after getting an approval), as the entire process can take up to 90 days.
• There are up to seven different types of small business loans…choosing the right one for you could take some time
While it’s common to initially assume that a small business loan is the best option, these requirements may be difficult to meet or may take longer than you’d like to get your business up and running.
Is a personal loan application process better?
The short answer is that the company that offers the personal loan can make an application and a decision regarding that application within a day.
With a personal loan, you don’t have to go through so many hoops. Instead, it’s much easier to acquire a loan in a timely manner (and without the hassles mentioned above).
Some of the main benefits of a personal business loan, especially when compared to a small business loan, include:
• Streamlined application process that can be started online or over the phone in minutes
• Fewer documentation requirements
• Same day decision (not always, but most of the time)
• Fewer complications, with the main decisions being the payment schedule and the amount to borrow
The simplicity and convenience alone are reason enough to learn more about using a personal loan for your business.
make a final decision
Now that you understand that a personal loan can be used for your business, you need to decide if this is the right financial solution for your business right now.
As you compare this option to a small business loan, ask and answer the following questions:
• How do you plan to use the funds?
• Do you need the money in the immediate future or can it wait?
• How much money do you need to borrow right now?
• Have you collected all the information you need for the application?
• What type of loan is more affordable in the long term?
By answering these questions while also consulting with a lender for each type of loan, you’ll be in a position to make an informed and confident decision.
Despite the name, you can use the funds from a personal loan for a variety of business expenses. There are several lenders, but the benefits and convenience of a personal loan make it a good consideration for any business.