When looking to raise capital for one’s business venture, having funds in place is important. Most entrepreneurs resort to availing a business loan to meet this financial requirement. However, not many people are aware that you can use a personal loan as an alternative option. While business loans are specifically granted with keeping your entrepreneurship interests in mind, a personal loan can be availed for any reason.
When looking to raise capital for one’s business venture, having funds in place is important. Most entrepreneurs resort to availing a business loan to meet this financial requirement. However, not many people are aware that you can use a personal loan as an alternative option. While business loans are specifically granted with keeping your entrepreneurship interests in mind, a personal loan can be availed for any reason.
So, which is better? And what exactly is the difference between personal loan and business loan?
Let us understand this in detail.
Personal Loan
A personal loan is an all-purpose, unsecured type of loan. You can avail a personal loan for a number of reasons without having to provide any kind of collateral as security against it.
A personal loan is a great way to get quick financial assistance in times of financial crunch. You might have enough funds as savings, however, in some situations, you might find yourself in need of some extra funds. By availing a personal loan, in addition to giving you instant cash, you get access to numerous benefits that come with it. For a personal loan you would not have to provide any of your personal assets as collateral. It is always better to get a personal loan instead of borrowing from family and friends. Unlike other secured loans like home loans, car loans, or education loans, personal loans can be used for a variety of purposes.
Disadvantages of a Personal Loan
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Business Loan
A business loan is granted for business purposes only. You can use a business loan to fund your start-up, expand the existing business infrastructure, fund your pay roll, or for any other business capital requirement.
Business Loans intend to fulfill the funding requirements of a business. This loan can be used for meeting working capital requirements, inventory and equipment purchase, and for other business-specific growth purposes. But with the simplification in the loan process, the major concern for the business owners is the repayment of the loan and its interest rates. Along with it, there are other worries looming due to the increase in tax with the surge in the capital.
Disadvantages of a Business Loan
In conclusion
Judging from the above comparison, choosing between a personal loan and a business loan is indeed a difficult decision. If you are comfortable with high interest rates and short loan tenure, a personal loan is the best option for you. However, if you want to avail a significantly larger amount and enjoy benefits such as tax exemptions and deductions on your loan, then opting for a business loan makes more sense.
For the sake of brevity-
Consider a business loan if:
Consider a personal loan if:
Ultimately, the decision to apply for a personal loan or a business loan lies with the borrower. If you are unsure which option would be best suitable for your financial needs, get in touch with a financial advisor who can help make the decision easy for you. To know more about the various features of business loan as well as a personal loan, visit us at Finserv Markets today! Whether you are a salaried individual looking to start your own business or an experienced businessperson hoping to get additional funding to expand your business avenues, we at Finserv Markers will assist you in all your financial endeavors. To know more, visit now!
Source: Bajaj Finserve
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