It can feel next to impossible to get startup funding, especially when your business hasn’t opened its doors. But because personal loans are lent to individuals, the state of your business won’t be a concern. Instead, your ability to repay and your creditworthiness are what lenders consider. You’ll still need to meet certain eligibility criteria, but you won’t have to provide a business plan or jump through the hoops associated with borrowing a business loan.
Can I use a personal loan for business?
The short answer is yes, you can use a personal loan for business needs.
Personal loans rely on your credit as an individual and play by rules that slightly differ from business requirements. You may have the option of a secured personal loan, but it’s less likely that you’ll need to provide collateral with a personal loan than with a business loan.
While personal loans can generally be used for any legitimate reason, including financing a business, you should consider the conditions they could come with. The biggest one is that your name — not your business name — is attached to the loan. Any missteps could become personal liabilities.
What do I need to qualify?
To get the best personal loan, you’ll generally need to have a good credit score of 680 or higher.
When applying for a personal loan, have your personal information and financial details handy. Depending on the lender, your application could take as little as five minutes to complete.