With the ceaseless and abiding fear of bailiffs like Wescot credit services, it is not surprising to see business owners constantly juggling between the financial options available to them. Many of them who have access to the right IVA advice and schemes, like trust deeds, go for debt financing, while those that are cool with sharing their business decisions opt for equity. But those that are not so cool with those two options go for something simple, straightforward, and accessible like personal loans instead. Oh, you didn’t know? Business owners can also use personal loans to fund their businesses. Gone are the days when personal loans were all about instant cash, payday loans, and homeowner loans. In this day and age, businesses can also benefit significantly from the various personal loan packages available out there. But is it a good idea to finance your business with personal loans? Some may wonder. Yes, it is! And that is what you’re about to find out in this post, so sit tight as we delve into the details.
Personal loans are a good idea for businesses when you’re seeking business growth
It is one thing to launch a new business startup; it is another thing to grow an existing one. Business startups are known to require a huge sum of capital at the start phase, capitals that can only be obtained through loans that are designed for businesses outright – business loans. But when your business is at a stage where all you need is an advancement in your current operations, then you may be better off taking a personal loan. Maybe you want to expand your business, hire more employees, get some new state-of-the-art equipment, rebrand existing products, or improve your brand further; getting personal loans maybe your best option.
Personal loans are a good idea for businesses when you have an attractive personal credit score
Even though we’re often told, as business owners, that our business lives are quite different from our personal lives, we can always make exceptions when the need arises. If you have no debt negotiation history with an IVA company, no lingering debt, and overall, you have a healthy credit history, and you need financing your business, taking a personal loan may be a wise choice.
Personal loans are a good idea for businesses when you have difficulty obtaining business loans
Even though business loans, such as bank loans, credit unions, and SBAs are designed for businesses, it is quite unfortunate that many small business owners are still deemed ineligible for these loans. Personal loans, on the other hand, are readily and easily accessible. And you don’t even need much paperwork and documentation to obtain them. With a decent credit history, you can be granted a personal loan within a short span of 24-48 hours.
Personal loans are a good idea for businesses when your business still hasn’t made a name for itself
For a small business lender to feel confident issuing you a loan, your business needs to speak for itself. A comprehensive business plan, reliable cash flow, and a visibly thriving facility all improve your chances of approval, because they’re all signs that your business is financially solvent enough to repay their debt – and has the track record to prove it. A brand-new business or a faltering business may encounter difficulty in all these aspects of its business loan application. So, if your business is faltering or you’re still in the early phase of your business, and you don’t need a hefty sum, you might have more luck getting approved for a personal loan.
Personal loans are a good idea for businesses when you need a little sum of money
Maybe you’ve spent a good share of your cash on personal expenses like a prepaid funeral plan, feeding, and other emergencies, and your business happens to be in an urgent need of a little sum of money. Taking business loans in such a situation may not be a wise choice. Even if you’re able to find a lender who’s willing to lend you the small amount of money your business needs, the interest rate may prove to be too expensive. In such instances, personal loans may be your best bet. Not only do they come in smaller packages than business loans, but you’re also likely to find them at a cheaper interest rate.
Personal loans are a good idea for businesses when you don’t have collateral
After insufficient cash flow, insufficient collateral is the most common reason why banks, and other lenders, dent small business loans. Personal loans, on the other hand, are unlikely to require collateral. If your savings or investments are looking thin, and if offering your home as collateral is off the table, you may want to consider taking a personal loan.