Should You Take Out Personal Loans for Your Company?
If you go through the website of a bank or any other private lender, you will come to know about the various types of loans that they offer. One of these is a personal loan. This type of loan is normally used by a person to pay off credit card debts that normally bear a large interest rate, home improvement projects, and even some unexpected expenditures. You will be surprised to know that there are some personal loans that can also be used for business expenses.
Can Personal Loans Be Used for Business Purposes?
The answer to this question is affirmative in most cases. Majority of the lenders, like https://buttonwoodfinance.com.au/, will allow you to use a personal loan for any reason. These may include starting your own company or paying for some business expenses. On the other hand, there are some lenders who may impose restrictions on the way you use your personal loan. Thus, it is always better to check with your lender before you opt for such a loan. If your lender does not let you use the personal loan for your business purposes, you will come across several lenders who will.
To be more detailed about personal loans, these are basically installment loans, which you need to pay back to your lender over a given period of time through monthly installments. Usually personal loans are unsecured. This means that you do not have to put up a collateral in order to get the loan. The amount that you can borrow as a personal loan, depends upon a lot of factors and also on the lender that you choose.
Most lenders will allow you an amount of $40000 through a personal loan. However, there are some that can offer you $100000, as well. The APR or annual percentage rates on these personal loans range from 5% to 36%. These rates are lower when compared to most of the business loans that you may take. It is also true that you qualify for a personal loan based on your credit history and personal finances. It does not depend upon your business. This is why it is one of the most popular options for business that cannot get funding from various conventional sources and different startups.
Advantages of a Personal Loan
There are several advantages of a personal loan as opposed to most other business loans available from banks. Some of these advantages are listed below.
- It is easy for you to qualify for a personal loan than qualify for a business loan. This is because for a personal loan, the lender only looks at your credit rating and personal finances.
- Repayment of personal loans is through monthly installments, which lets you opt for easier budgeting as opposed to weekly or even daily repayments that most of the business lenders ask.
- Lenders of personal loans are flexible in terms of the manner in which you use the personal loan amount. You can split the amount between your personal and business needs or expenses.