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A lot of people don’t know that you can actually use a personal loan for business purposes. Personal loans are especially helpful for new businesses that don’t have a long financial history to show lenders. Personal loans can often have lower interest rates than some business loans, making it a great option for young companies looking for financing to grow their business.
How Personal Loans For Business Work
While you can use personal loans for business purposes, it is important to understand how personal loans “for business” differ from the traditional business loan. Personal loans are highly dependent on your individual credit score rather than the financial track record of your business. In fact, the personal credit score is the most important part of the personal loan application. After all, these lenders are making a loan to you, the business owner, and it is your responsibility to repay the loan. The fact you’re using the loan for your business doesn’t change that.
For new businesses or small businesses that do not yet have significant financial history, personal loans may be a perfect fit. That being said, personal loans for business are only really an option if the business owner has a strong credit score.
The nice thing about personal loans is that their cost structure is very easy to understand. You pay back these loans with fixed monthly payments, making it simple to budget for this expense. However, be aware that these loans will have a closing cost. If you apply for a $5,000 loan and there is a $250 closing fee, that means you will only see $4,750 in your account, but will pay interest on the original $5,000.
If you have an average or excellent credit score, personal loans for small business may be an excellent option. In fact, you will want to have a credit score of 640+ to even consider this as an option. And, to reiterate, nothing about your business will be considered in the loan application. Lenders will be purely focused on your personal finances.
At Furtenburg .Inc our strategy is simple, we focus on funding money for our client’s through multiple different channels offering a variety of terms and rates. As a result, whether we are funding the deal ourselves in-house or partnering with a larger institution or lender to bridge the gap, Furtenburg .Inc will put the money in your account fast, every time.