Are you thinking of applying for a personal loan for your business? Here are some things to consider before going in for a personal loan for your business!
Advantages Of A Personal Loan:
1. Easier To Qualify For!
With a new setting or a business, it is always difficult to say which lender would be willing to work with you. In such a case it is always easier to get approval for a personal loan because the lender looks at only your personal credit history and income. You don’t need to provide business plans or documentation like you would for a business loan.
2. Lenders Disburse Loan Amount Faster!
Lenders many a time disburse personal loans in a matter of days. So, if you are in need of quick funds, a personal loan might seem like a better option.
3. No Need For Security!
Most of the business loan lenders ask you to put your assets as security and If you fail to make your payments on time the lender may seize these assets. But most personal loans are unsecured and do not require any collateral. And even if you are negligent about repaying your loan, the lender cannot seize your assets.
Disadvantages Of A Personal Loan:
1. It’s A Risk To Your Personal Credit Score!
When you take a personal loan you put your own credit at risk. If your business fails or if you fail to keep up with your payments, your credit score can get affected and as a result drop. A low credit score and a history of late payments can make it more difficult for you to get approved for any other forms of credit.
2. High Processing Fee And Interest Rate!
Most banks and NBFCs charge a processing fee which is a certain percentage of the loan amount. This fee is usually higher than the one charged towards a secured loan, which means that a borrower gets a lower amount than requested. Interest rates for personal loans are on the higher side because they are unsecured.
Wondering if it’s possible to take unsecured business loans? Gromor offers small business loans for machinery, manufacturing etc. at affordable interest rates with a simple online procedure to empower small businesses. Visit Gromor Finance to know more.