Some small business owners are unable to offer collateral to the lender, so does this mean they have closed every possible financial opportunity on themselves? Fortunately, unsecured funding option is still available for the users; personal business loans is the money borrowed from any traditional or alternative lender without offering any collateral and borrower makes the repayment in three to five years.
Most of the lenders gave complete autonomy to the borrower to use a personal business loan to their delight. From utilizing the funds to purchase James Pollock’s art to hang in the office lobby to purchasing a piece of commercial bindery equipment for your printing business, you can exert the funds in whichever way. Personal loans are a perfect funding solution for an already established business and to kick start any startup.
The repayment strategy of a personal loan is similar to the installment loan. Through the personal loan, you have access to at least $40,000 to $100,000 with an annual percentage rate of 5% to 36%. In comparison to the other traditional loans, the interest rate of a Personal Business Loan is slightly lower. The lender calculates the final loan amount after looking at the credit history, bank statement, income flow, and credits score report. Before you dive into the final payment of the personal business loan, it is better to assess the pros and cons from the lens of your business and financial needs.
- Qualification Criteria
If you have a poor credit score, then you will have a harder time qualifying for a personal loan from the bank. The approval process and qualification criteria get tougher if you need a loan for a startup. On the contrary, personal business loan lender doesn’t need remarkable business finances. Their focus is on your steady income and credit history. With a strong credit profile – fair credit score and high income –you can get a personal business loan at an interest rate as low as 4%.
- No collateral!
Do you hate putting your valuables such as cars and home as collateral? You can get financial momentum for your business from a personal business loan without offering any collateral. Majority of the personal loans are unsecured meaning the lenders don’t ask for collateral from the borrowers.
Failure to make the loan payments on time have a significant impact on the credit score of the borrower, but the lender would have no direct control over the asset of the borrower.
- Quick access
You can get a personal business loan in 2-3 days, but you have to wait for at least a week or a month to get an SBA approved the loan. So, if you had to push pause on your business dreams due to the lack of funds, a personal business loan offers a rapid boost that your small business needs.
The pros of the Personal Business Loan outweigh its cons; still, it is wise to consider its drawbacks.
- Credit score on the line!
Your personal assets are safe, but your credit score is in danger! Taking out a personal business loan is risky for your personal credit score. If you fail to clear off the pending debt, within the given time, your personal credit score can go down the hill. Poor credit score report doesn’t look appealing on the loan application. It can hurt your chances of loan approvals for the future.
- The lesser loan amount and higher interest rates
When a borrower applies for an SBA loan, he has access to approximately $5 million. On the other hand, a personal business loan only gives you access to $100,000. With this limited amount, you will be able to cover short-term financial needs. Other than this, higher interest is another drawback. Borrowers who apply for a personal business loan are not standing on a remarkable financial position, so the rates are higher because the lender doesn’t want to face the adverse consequences. The small business loans, be it secured or unsecured, provides a perfect opportunity to build an outstanding credit profile. You must avail it!
Lastly, if you need fast access to funds without any collateral, a Personal Business Loan is the answer to your financial worries. For more information and tips to secure the best funding, follow us on Facebook (@Onlinecheck) and Twitter (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer every question and guide you throughout the way.