If you are planning to start a business, first and foremost you will need capital, which in simple words mean the money you need to run your business. The ideal situation would be to get a business loan from a bank. However, more often than not, getting loans from banks, especially for startups proves to be tricky. Infact it is usually a huge hassle to get a bank loan for your business if you do not have a past track record to show. For all such reasons and more, using personal loans to start a business is far easier and hassle free idea.
Why or when you should use personal loans to start a business
If you are in the idea stage:
If your business is still in the primary ideation stage, it will be extremely difficult to get a loan from a bank since usually banks only extend financial assistance to firms which are already up and running or have a good past track record to prove. Even if your idea is brilliant and has a lot of potential, you are most likely to face a dead wall since banks do not give loans to mere ideas. In such cases, using a personal loan as seed money is the best bet for you.
If there is a collateral / guarantor issue:
In case of bank loans, banks usually ask for either a collateral in some form or a credit worthy individual to act as a guarantor for the loan. However, collateral might be a problem if you are very new in business or are in the service sector. Hence, for such cases where collaterals or guarantors is an issue, personal loans can fund your business.
Low loan amount:
If the amount you need to start your business with is not very huge, going for personal loans is anyways a better idea since the long drawn process and the plethora of formalities and paper work required in case of a business loan is simply not worth it. Personal loans are much simpler and can be got in a hassle-free way.
No Questions Asked:
In case of business loans, a lot of questions are asked and a lot of paper work needs to be done. You need to clearly state how you are going to utilize the money and if the banks find your business intentions sketchy, your loan would be rejected. In case of personal loans on the other hand, no such questions are asked about the money utilization aspect. Hence, if your startup plan is still vague and you want to take the risk, using a personal loan for your business is a better idea.
How to get a personal loan:
There are various online sites where with a few clicks you will get to see the vast array of personal loan offerings that the banks have to offer. At these sites you can choose as per your preferences and also compare and contrast one with the other on the basis of their rate of interest, loan tenure, etc. Once you have chosen, it’s just a matter of approaching and applying, both of which consist of a few simple easy steps. If you do not want a personal loan from a bank, there are various online financial sites as well which provide you loans against interest in times of your need.
So what are you waiting for? You have that bright idea in your head and want to do something about it? Use personal loans to start your business and make it big in life!