Thinking to start your own business? Well, that’s a great idea, but do you have enough funding for your business?
Most of the small business owners require money for their initial setup and when it comes to the funding system, two most common terms comes in their mind — personal loans or business loans. Undoubtedly both of these work, even if it about improving your inventory or taking new projects.
For new business owners with fewer options of small business funding, they struggle to choose from one of these. Some might recommend you for the former one and other for the latter. The debate is never-ending but you need to analyze depending on your financial needs. You definitely need to go through a series of questions to understand what is the right option for you.
You need to consider a few factors prior to taking business decisions. Even when it a simple matter to some of the most complex financial matters, taking into consideration a few factors tend to be a great way to understand what is right for your business. Well, let’s now find out the way to decide which is better for your business — personal loan or business loan?
What is the difference between Personal Loan and Business Loan?
Personal Loans offer both variable and fixed interest rates. Some of the lenders offer initial APR 3.99% and even lesser for secured loans.
For business Loans, the lenders charges vary a lot from one person to another. Some might offer a low-interest rate of 5.5% while others might charge monthly fees in spite of the conventional loan interest rates.
In personal loans, the repayment periods mostly vary between 1 to 7 years.
In business loans, both long terms and short-term financing options are there for small business owners. Here you can also get financing options may be for a month or maybe longer for 25 years with the SBA loans.
In personal loans, you get a maximum amount of $1,000 to $500,000 or more.
In business loans, you can get a maximum amount of $5 million or more, depending on the nature of the loan.
In personal loans, the owner needs to have an excellent credit score. Lenders, according to requirement may also check other financial aspects like debt-to-income and your income ratio.
The business finances are much heavier than the personal finances. Mostly it needs you to be in the business for at least a year along with having the monthly revenue of $10,000.
Ease of Application:
In case of personal loans, applications can be filled in just a few minutes with pre-approval from lenders.
In case of business loans, you will need to submit accounting numbers and business plan with the application. Most traditional lenders will ask to apply for a business loan.
These are some of the major factors that you require considering when it comes to choosing loans for your business. Once you have decided, you can opt for a reliable banker to get your Fast Approval Loans for your business.
So make your decision now and enjoy stable financial business background.