People utilize personal loans for a number of reasons, such as consolidating debts, paying for a medical debt or for costly auto repairs.
But there is something else the average consumer needs to know: a personal loan can be used for your small business.
Despite the label, a personal loan could just be what is needed to maintain your business. The personal microloan can be used for certain expenses such as:
• Equipment (things like printers, tools, copiers, manufacturing equipment, cubicles, etc.)
• Office space (either to purchase or rent)
• Marketing and advertising (digital, promotions, print, etc.)
For any type of business expense, if your business does not have the extra capital but needs cash to grow, then a personal microloan is a feasible option.
Small Business Loan vs. Personal Loan
Most small businesses that require necessary funds in order to grow their business typically search for a small business loan. This makes sense as a small business loan is generally beneficial to the small business owner.
In certain situations, the small business loan assists the business owner to purchase large ticket items, such equipment, inventory, or raw materials. However, just because the small business loan is the industry standard, it does not always make it the correct solution.
The biggest problem with a small business loan is the stringent requirements. Not only does this hold true with the eligibility requirements, but it also comes into play during the application process. Here are some of the biggest challenges:
• Lengthy application process that can eat up hours of valuable time
• Documentation requirements, such as providing a business plan, tax returns, references, and financial data
• It can take a long time to receive the funds (even after you get an approval), as the entire process can take up to 90 days
• There are as many as seven different types of small business loans… choosing the right one for you could take some time
Although it’s common to initially assume that a small business loan is the best choice, you may find that these requirements are difficult to meet or will take longer than you want to get your business moving.
Is a Personal Loan Application Process Any Better?
The short answer is that an application and decision regarding that application can be made by the company offering the personal loan within one day.
With a personal loan, you don’t have to jump through nearly as many hoops. Instead, its’ much easier to acquire a loan in a timely manner (and without the hassles mentioned above).
Some of the primary benefits of a personal loan for business use – especially compared to a small business loan – include:
• Simplified application process that can be started online or over the phone within a matter of minutes
• Fewer documentation requirements
• Same day decision (not always but most of the time)
• Fewer complications, with the main decisions being the repayment schedule and amount to borrow
The simplicity and convenience alone is reason enough to learn more about using a personal loan for your business.
Making a Final Decision
Now that you understand that a personal loan can be utilized for your business, you need to decide if this is the right financial solution for your company at the present time.
As you compare this option to a small business loan, ask and answer the following questions:
• How do you plan on using the funds?
• Do you need the money in the immediate future, or can you afford to wait?
• How much money do you need to borrow at the present time?
• Have you collected all the information you need for the application?
• Which type of loan is most affordable over the long run?
By answering these questions, while also consulting with a lender for each type of loan, you’ll find yourself in a position to make an informed and confident decision.
Despite the name, you can use the funds from a personal loan for a variety of business expenses. There are several lenders out there, but the benefits and convenience of a personal loan make it a sound consideration for any company.