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People use personal loans for a variety of reasons, such as consolidating debt, paying off medical debt or for expensive auto repairs.
But there’s something else the average consumer needs to know: Personal loans can be used to finance your small business.
Regardless of the label, a personal loan may be just what is needed to keep your business afloat. Personal microloans can be used for certain expenses such as:
• inventory
• Equipment (things like printers, equipment, copiers, construction equipment, cubicles, etc.)
• Office space (to buy or rent)
• Marketing and advertising (digital, promotional, print, etc.)
For any type of business expenses, if your business does not have spare capital but needs cash to grow, a personal micro loan is a feasible option.
Small Business Loan Vs Personal Loan
Most small businesses that need the necessary funding to grow their business usually look for a small business loan. This makes sense because a small business loan is generally beneficial to the small business owner.
In some situations, small business loans help the business owner purchase big ticket items, such as equipment, inventory or raw materials. However, just because a small business loan is the industry standard, it doesn’t always make it the right solution.
The biggest problem with a small business loan is the stringent requirements. This is not only true with the eligibility requirements, but it also applies during the application process. Here are some of the biggest challenges:
• Lengthy application process that can take hours of precious time
• Documentation requirements, such as providing business plans, tax returns, references and financial data
• Getting funds can take a long time (even after you’ve been approved), as the entire process can take up to 90 days
• There are seven different types of small business loans… It may take some time to choose the right loan for you
While it’s common to initially assume that a small business loan is the best option, you may find that meeting these requirements is difficult or will take longer than you’d like to grow your business.
Is the personal loan application process any better?
The short answer is that an application and a decision regarding that application can be made within a working day by the company offering the personal loan.
With a personal loan, you do not have to do nearly as many rounds. Instead, it’s much easier to get a loan in a timely manner (and without the hassles mentioned above).
Some of the primary benefits of personal loans for business use – especially compared to small business loans – include:
• Simplified application process that can be started online or over the phone in minutes
• Reduced Documentation Requirements
• Same day verdict (not always but most of the time)
• Fewer complications, with key decisions on repayment schedule and borrowing amount
The simplicity and convenience is reason enough to know more about using a personal loan for your business.
make the final decision
Now that you understand that personal loans can be used for your business, you need to decide whether it is the right financial solution for your company at the present time.
As you compare this option with a small business loan, ask and answer the following questions:
• How do you plan to use the money?
• Do you need the money in the immediate future, or can you wait?
• How much money do you need to borrow at present?
• Have you gathered all the information required by the application?
• Which type of loan is most affordable in the long run?
By answering these questions, you will find yourself in a position to make an informed and confident decision when consulting a lender for each type of loan.
Despite the name, you can use the money from a personal loan for a variety of business expenses. There are many lenders out there, but the benefits and convenience of a personal loan Make it a good idea for any company.
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