Advantages and disadvantages of personal loan

Sometimes it is not possible to get start up loan for new business, because of different sorts of reasons. But you can always get personal loan easily and use this money for your business purpose. As personal loan is lent to an individual and your business or financial situation is not the lenders concern. You can find personal loan website by searching online. They only consider your ability to repay the debt and your creditworthiness, and you have to meet certain criteria of money online lenders. You should fully understand that in personal loan for business, your personal credit score matter more than your business financial history. Most important part of loan application process is your strong credit score.

Benefit of using personal loan is that there is no obligation to show your business plans or provide your business statements. In this way your time is saved due to, no or less paperwork, you will get personal loan faster than small business loan.

Generally personal loan is used for any legitimate purpose. But it is important to consider that in personal loan your name is attached not your business name. In case of any failure or blunder in your business, it will become your personal liability.

It is easy to apply for personal loan online and you just fill the online form with your personal information and some business details, if required by the online lenders. Personal loans have many benefits but you should also look at its drawbacks.  

Personal loans offer lower interest rates and they are less expensive than business loans. They are good for people with limited business history. You do not have to worry to repay loan money daily or weekly basis, which becomes very irritating and hectic for a small business owner. You can relax and payback loan in monthly installments .And instead you can use this money on other business expenditures. That is why many people prefer personal lenders on small business lenders.

There are no hidden charges or fee in personal loan. It is easy to understand the payment structure, the term loan. You should be aware of closing fee, which is subtracted from the approved loan amount before it reaches your bank account. But you will have to pay interest rate on the whole amount of approved loan.  

But some people like to separate their personal expenditures from business. The personal loan is in limited amount and sometimes unable to meet your business requirements. On the other hand you can apply for a larger amount for small business loan.

Some business lenders offer financial support apart from business loan money, like business experts to grow your business, or access of tools which is not available in personal loan. These business experts help you avoid making mistakes and giving you best business plans for your success.

You have to pay tax on amount used for business purpose. You have to keep record of business expenses and you should separate your business accounts from your personal funds, which makes it easy for you to decide what percentage of interest you pay goes in business finances.

Leave A Reply