People use personal loans for a number of reasons, such as to consolidate debt, pay for a medical debt, or for costly car repairs.
But there’s 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 be just what is needed to keep your business going. The personal microcredit can be used for certain expenses, such as:
• Inventory
• Equipment (things like printers, tools, copiers, manufacturing equipment, cabins, etc.)
• Office space (either for purchase or for rent)
• Marketing and advertising (digital, promotions, print, etc.)
For any type of business expense, if your business doesn’t have the extra capital but needs cash to grow, then a personal microloan is a viable option.
Small Business Loan vs. Personal Loan
Most small businesses that need the necessary funds 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 certain situations, the small business loan helps the business owner buy large ticket items, such as equipment, inventory, or raw materials. But just because small business loan is the industry standard doesn’t always make it the right solution.
The biggest problem with a small business loan is the strict requirements. This applies not only to the admission requirements, but also during the application process. Here are some of the biggest challenges:
• Lengthy application process that can take hours of valuable time
• Documentation requirements, such as providing a business plan, tax returns, references and financial data
• It may take a long time to receive the money (even after you get a permit) as the whole process can take up to 90 days
• There are up to seven different types of small business loans… Choosing the right one for you might 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 take longer than you’d like to get your business going.
Is a personal loan application process better?
The short answer is that an application and decision on that application can be made by the company offering the personal loan within a day.
With a personal loan, you don’t have to jump through nearly as many tires. Instead, it’s much easier to purchase a loan on time (and without the problems mentioned above).
Some of the main advantages of a personal loan for business use – especially when compared to a small business loan – are:
• Simplified application process that can be started online or by phone within minutes
• Less documentation effort
• Decision on the same day (not always, but most of the time)
• Fewer complications, with the main decisions being the repayment plan and the loan amount
The simplicity and convenience alone is reason enough to learn more about using a personal loan for your business.
Make a final decision
Now that you understand that a personal loan can be used for your business, you need to decide if this is currently the right financial solution for your business.
If you’re comparing this option to a small business loan, ask and answer the following questions:
• How do you plan the use of the funds?
• Do you need the money in the immediate future or can you afford to wait?
• How much money do you currently need to borrow?
• Have you collected all the information you need to apply?
• What type of loan is the cheapest in the long run?
By answering these questions and at the same time consulting a lender for each type of loan, you will be able 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 good consideration for any business.
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#personal #microloan #business
Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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