How to Use a Personal Loan for Your Startup Business
Starting your own business is a worthy endeavor to take. While many people want to become an entrepreneur, not everyone has the money to do it in the first place. Usually, people apply for a business loan to get some capital to start the business, but is it possible to take out a personal loan instead? If you’re like many, who are wondering how a personal loan can be used for your startup or even your existing business, then this guide is for you.
Why Choose a Personal Loan over a Business Loan?
It’s quite understandable why some people would prefer to get a personal loan instead of a business loan. While business loans can be great cash injections and provide the seed capital needed to establish and grow your business, they aren’t always easy to obtain compared to a personal loan. In fact, many lenders won’t even talk to you until you already have experience running a business for at least two to three years.
As an alternative, many entrepreneurs turn to banks, credit unions, or other financial institutions to take out personal loans. Most people also find the payment terms of personal loans much more comfortable since they can repay it between two and five years through fixed monthly payments.
Is it Possible to Acquire a Personal Loan for my Business?
The straight answer is, yes, it’s possible. Some personal loans can indeed be used to fund a new or existing business. However, before you start applying for a personal loan, you should first check if the lender doesn’t impose any restrictions for business use. You should also thoroughly read through the loan’s conditions beforehand to see if there are any restrictions or limitations you should be aware of.
Typically, your lender would inform you about what their personal loans can be used for, and you can just as easily ask them about it. You should be honest with your intentions as a borrower and let your lender know that you’re going to use it to build a business. If you happen to withhold that information and the lenders find out you used a loan for a prohibited purpose, they could make you repay the borrowed sum and the resultant interest immediately.
When Should I Get a Personal Loan?
Business loans are more targeted towards established business owners who just want to inject more money into their cash flow or maybe expand their business. Startups or even some businesses with limited or no trading history may find it difficult to get approved for a business loan. That’s not to say you shouldn’t try applying for one. You should try it first, and you may find a lender that could approve your application.
However, if you don’t get approved for a standard business loan, that would be the best time to get a personal loan instead. While most personal loans don’t offer a sizable maximum loan amount, you can at least get the business started with a small enough loan.
If you want to launch or grow a business but can't seem to qualify for a small business loan, a personal loan could be an appealing alternative. Personal loans are a great way to obtain some cash to launch your business, and it’s also faster and easier to apply for.
Gadsden Finance is here to help make life a little easier with our installment loans. We offer clients a hassle-free way of getting some financing, especially when they need it the most. If you’re planning to apply for a small personal loan in Gadsden, AL, feel free to reach out to us. Contact us today to start your application!