Best Personal Business Loans
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Common Questions About Personal Business Loans
Can I get a personal loan for a business?
Which bank gives the best personal loans for business?
Is it better to get a personal loan or a business loan?
What do the best lenders look at when considering business personal loan?
- Your capacity is usually measured by your (or your business's) debt-to-income ratio.
- Collateral refers to what assets you own that a lender could seize to cover their losses if you can't repay the loan.
- Capital is the amount of money you or your company can access. If your business doesn't have much capital to work with, the lender may consider you too high a risk.
- Character is related to the reputation and history of your company. When you use a personal loan, your credit history is usually the main basis for your "character."
Is it easier to get a personal or business loan?
What is a personal business loan?
Can I use a personal loan to buy a business?
What are the best personal business loan rates?
What are the pros and cons of using a personal loan to start a business?
Advantages of personal loans
- Lower APR than a business credit card. This isn't always the case, as personal loans can have three-figure interest rates, but if you have good credit you can save money.
- Easier to apply. Business loans usually require more paperwork.
- Fewer restrictions. You can use the money for any business expense, such as payroll, market, and inventory; or even use some of the money for personal stuff.
Drawbacks of using personal loans for business loans
- Smaller loan amounts. You may need more money than what personal loan providers are willing to lend.
- Personal liability. Your personal assets may be at risk if you use your house or mortgage as security.
- No tax benefits. You can't claim tax credits on personal loans like you sometimes can with a business loan.
What alternatives are there to personal loans for small businesses?
- Grants. There are state and local government agencies that offer grants to small businesses.
- Credit cards. Remember that in most cases the owner of a small business will be personally liable for credit card debt even if it's on a business credit card.
- A line of credit. These are similar to credit cards and are often used by small businesses as bridge loans to cover cash-flow gaps.
- Merchant cash advances. If your business often gets paid by credit or debit card you may be able to get an advance on future sales. Although they are easier to get than regular business loans, they are also much more expensive.
How do I apply for a personal loan for my business?
- Check your credit report (business and personal) and fix any errors that may be hurting your score.
- Decide how much money you need to borrow for your business. If you're not sure, a line of credit may be worth considering.
- Research which lenders provide the best rates and terms for your credit profile. The list above is a great place to start.
- Prequalify for at least three loans to see which offers the best deal.
- Complete and submit the application form with the lender you choose. Most lenders take two to five business days to fund a loan once the application is approved.
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