Getting personal loans is very easy if you have a steady source of income. Although named personal loans, there is no stipulation that you must use it for personal reasons only. Any lending company will never ask you the reason for taking a loan. They will give you the money because you need it. You can use the money for whatever purpose you feel like – spending for your wedding, vacationing with your family, buying something immediately that has driven you crazy, meeting expenses for some medical emergencies in the family or any other thing. If you want to engage in wagering, then even you can use the money that you have got from personal loans. Personal loans are as good as your own money, and you can spend it in the way you want.
Loan for business
The liberty of spending the money in your way gives you the option of using personal loans for business just in the way you use credit card loans. Arranging for finance to start up a business is very challenging, and even after doing everything from planning to paperwork related to the creation of infrastructure, funds can become a bottleneck. In order get your products or services in front of the masses you need money at the right time. The problem that start-ups have to face in arranging finances is that to qualify for business loans, the business has to be operational for at least one year and in some cases for two years.
To circumvent the problem, business owners can avail personal loans that they can use for business. Unlike business loans that are earmarked exclusively for business use, the flexibility of using personal loans allows business owners to use it as a business loan without naming it.
Quick loans for business
Fast loan disbursal is the hallmark of personal loans, and the speed becomes a significant factor when you are using it for business. Some lending companies can offer up to $50,000 loan when you are using it for business, and the repayment tenure can vary between 1 and 5 years. The interest rate can vary depending on lenders but can range between 4% and 36% depending on personal credit rating. Higher credit rating entails lower interest and better terms.
Not for all but for most
It will be wrong to say that personal loans are for all, instead of saying that most people can avail it would be a better way of putting it in the right perspective. What matters most to qualify for a personal loan is your ability to pay back the loan on time and your creditworthiness. If you can pay back the loan and assure lenders about it, you are a good candidate for getting the loan. This is quite natural because who would like to lend money to someone who cannot assure about payment?
What about credit score?
The popularity of personal loans stems from the fact that people with poor credit score can also qualify for it. When you approach a bank or any traditional lender for a loan, they will first check your credit score, which should be in the acceptable level set by the lender usually 680 plus. In case you do not meet the criterion, you will be re disqualified. It does not happen for personal loans. Creditworthiness does matter for personal loans too, but the lending companies do not debar borrowers just because they have a poor credit score. Those with less than satisfactory credit score can qualify for personal loans but must pay higher interest than those with better ratings. Besides, better credit score enables borrowers to avail a higher amount of loan.
What makes personal loans attractive for business?
There two primary reasons why business owners and entrepreneurs find personal loans an excellent choice for business. The first reason is that it suits the needs of start-ups that need money but does not meet the eligibility criteria for other types of loans that stipulates that business age has to be between 1-2 years. The other reason is that personal loans are unsecured loans. Since the business start-up must have already availed other loans by pledging assets and other securities they may not have anything more to offer. Personal loans being unsecured provide great relief besides providing assured money immediately. Although personal loans carry higher interest, the short tenure is an attraction,
Quick money means more acceleration
It is not just enough to ensure that business ventures start-up smoothly, but the process must be fast because any delay can be a setback in competition. Having got a toehold in business is good encouragement for entrepreneurs, but it is more important to make the business gather momentum that helps to accelerate growth. To make the company grow faster, it requires frequent pumping in of finances and personal loans help to achieve it with ease. The quicker you can put in money in business the better would be the growth possibilities, and there is hardly anything better than personal loans that provide quick money at the shortest time when you need it the most. Maintaining good personal credit helps to get more loans at lower interest and business owners must pay attention to this aspect if they want to get the most from personal loans for business.
Time of availability offsets the higher cost
Time is the essence in financing and more so for business because the inability to arrange for funds on time can impact business fortunes adversely. When business owners reach out for personal loans for business, they are more inclined to get the money instantly for which they are ready to pay higher interest that accompanies personal loans. When money is in hand, they can make it grow faster by utilizing it for a business that helps to recover more than whatever extra expenses they have to bear for high-interest loans.
When availing personal loans for business, pay attention to the conditions attached to it to ensure that there is nothing detrimental to your business interests.