Updated: Oct 22, 2021
If you’re planning to apply for a loan, a personal loan must be your top choice. Why? Because you can use a personal loan for any purpose without restrictions or limitations. You can even get approved in just a few days or even hours.
If starting a business is your main reason for applying for a loan, then you’ve come to the right place. In this article, we will tell you how you can use a personal loan to jumpstart your business venture. Read on to learn more about how personal loans work for small business owners like you.
What Makes a Personal Loan So Ideal for Small Business Owners?
We have a lot to tell you about why a personal loan is ideal for small business owners. Let’s start it off with the personal loan’s benefit of not being secured. Not being secured only means that you don’t have to put any of your assets as collateral. There’s no need to worry that your lender will take your assets if you can’t pay off your loan.
Another reason why a personal loan is ideal for people planning to start a business is that they are not required to share their business plan or tax information with the lender, unlike the Small Business Administration (SBA) loan. If you’re planning to start a business, you are also not required to prove that your business has consistent cash flow. SBA loan lenders require this from start-up business owners to prove that they can repay the loan.
Essentially, you are free to use the personal loan anywhere you want unless the lender makes some rules. You can use it to purchase inventory, do market research, hire contractors, or whatever it is that your business needs.
How Long Does It Take for a Personal Loan to Get Approved and Repaid?
Choosing a personal loan to start your business will be easier for you. Since you don’t have to provide in-depth business details like legal and tax documents and financial statements when applying for a personal loan, you can get approved as early as the day of your application or the next day. You can get qualified easily, unlike the SBA loan.
Usually, you must repay the personal loan 3-5 years later, depending on the lender and the loan terms.
What Are the Disadvantages of Using a Personal Loan to Start a Business?
While a personal loan is ideal for a start-up business, the interest you pay on this loan may not be deductible, unlike a business loan. But, it’s still possible to deduct some of the interest from a personal loan as long as you can prove that you use all the amount for your business expenses.
Additionally, you may not have all the funds you need if you choose a personal loan because you can only borrow from about $1,000 to $50,000. This amount may not be enough to provide for your business expenses.
Even if you can only borrow a small amount of money in a personal loan for starting a business, it can already come a long way. After all, at least you have something to jumpstart your business plans. It can be the easiest way to get your business off the ground. Just make sure to find a lender that can offer you the best personal loan suitable to your needs.
Are you looking for a company that offers personal loans in Athens, AL? Athens Finance provides a variety of personal loan sizes to fit your needs. We will review our different options, and upon approval, we will put you on an affordable payment plan. Our application process typically takes 5-10 minutes, and it is always our goal to make same-day loans. Get in touch with us today!