Personal Loans for Business that drives your business forward.
A personal loan is money borrowed from a bank, credit union or online lender that can be used for any number of purposes, including funding a business. Most personal loans are unsecured, which means they don’t require collateral, and you pay them back in fixed monthly payments, typically over two to five years.
As long as your lender has no restrictions against using a personal loan for your business, you can use the money to purchase equipment and inventory, kick-start your marketing efforts or put toward other costs you encounter when starting a business.
If you’re just getting started on your business venture, you may also have more luck qualifying for a personal loan than a business loan. When underwriting business loans, lenders look at things like your company’s revenue and time in business, along with your personal credit score.
For a first-time business owner with a brand-new business, you won’t have some of the histories that small-business lenders are looking for.
Personal loans, however, are underwritten based primarily on your credit score and your income. That means you can include other income sources — maybe you still have your 9-to-5 job, or maybe you have rental properties — to supplement the initial trickle of income you’ll earn from your new venture.
If you make over $50,000 in verifiable income, have a personal credit score of 650 > and rent/own a home you can qualify for up to $200,000.
Flexibility: You can typically use the funds you receive from a personal loan however you please, whether it’s toward marketing, product development, office supplies, or another purpose. This is especially convenient if you are a sole proprietor operating out of your home; you can split the funds between personal and business use to cover any shortfalls in your day-to-day expenses.
Lower APRs possible: Depending mostly on your credit score, personal loans tend to have lower annual percentage rates than credit cards, saving you money over the lifetime of the loan. They also have fixed payments that ensure your loan is paid back within a certain time frame, avoiding the possibility of letting interest pile up on lingering revolving debt.
When Does a Personal Loan Make Sense for Business Owner?
Ask yourself can I pay the loan back if the business fails?
If you were denied for a business loan, and a personal loan is your only option, I’ll pose the same question again: how are you going to pay it back? If you know exactly how you’ll repay the loan, then a personal loan could be the solution. But if your business was denied for a loan, is it because finances are an issue? This could create problems down the road not only for your business but if you take on that loan, your personal life too.
For young businesses with limited financial history, getting a small business loan will be near impossible. It’s likely that your only option will be a personal loan.
You can get a low annual percentage rate if you have a good to excellent personal credit score.
Many personal loan providers have APRs as low as 10% or 15%.
Personal loans are term loans with terms of 1 to 7 years and an example of the monthly payment and overall cost see below:
$100,000 X 10% interest rate over 7 years the monthly payment would be $1,660.00 and the total interest paid = $39,449.
Paying the Closing Fee
There is a charge you should be aware of, though: the closing fee.
Subtract the closing fee from the loan amount you’ve been approved for, and that’s how much capital you can actually expect in your bank account.
Say you apply for a $25K loan, but there’s a $2,500 closing fee attached.
Once you get funded, you’ll only receive $22,500 in your bank account—but you’ll have to pay interest on that original $25K.
BitX Funding is your online marketplace for Startup Business loans. From SBA, start-up lines of credit, short-term loans, mid-term loans, invoice financing to merchant cash advances and lines of credit, BitX Funding is where lenders compete for your business. Our top-rated lenders focus on real-life business data and cash flow, which means you can qualify for a loan even if your credit score isn’t perfect. What differentiates us from the competition is that with a brief questionnaire our highly trained loan consultant will listen to your needs and match you with the appropriate funding. You can go at it alone and spend hours online trying to find funding for your business or you can have a one-stop experience with BitX Funding and our direct connection with the lenders.