The short answer is Yes! If you are looking to expand your business, it makes sense to take a small personal loan and give wings to your ideas.
Personal loan falls into the category of unsecured debt and the amount you can get entirely depends on your credit score. Personal loans are different from credit cards as the latter falls into the category of revolving loans.
Getting a personal loan is easy as compared to a business loan. Once you have the loan amount, you can do whatever you wish when using the money. The interest rates on personal loans are higher so the best suggestion would be to pay it off as quickly as possible.
How Much Can You Borrow?
Depending on your credit score, you can borrow somewhere between £5000 – £100000.
What is the Typical Loan Term?
The typical loan term ranges from 3-5 years.
What Are the Interest Rates?
These can vary depending on your bank and on your personal credit. It can fall in the range 6% – 35%.
Personal Loans Are a Boon For Small Businesses
When you are starting up your business, you have limited funding at your disposal and getting a small business loan will be extremely difficult because of the collateral involved and little business reputation.
Here are some of the reasons why personal loans can be used for business:
- A personal loan is not challenging to obtain as compared to a business loan which requires a lot of paperwork. Smaller business owners find it extremely hard to get business finance from banks. This is where personal loans come to the rescue.
- All you need is a high credit score to secure a personal loan amount of your choice.
- The most prominent advantage that comes with personal loans is that they are unsecured meaning you don’t have to put your home or property as security in case you fail to repay. This is not the case with a business loan which is secured in nature and requires you to put your home or business property against the loan. This means the bank can act against the property in case you fail to repay. Personal loans are risk-free and also hassle-free in nature.
- You can get the loan approval with only a personal guarantee.
- If you don’t require a lot of money to bootstrap your business, then personal loan is the one you should opt for.
As suggested, getting a personal loan is much easier, and the EMI’s are also smaller so that you can pay them conveniently without any hassle.
Also, everything depends on your credit score! Hence, it is essential for you to know your credit score before you apply for a personal loan.