Why to Take a Personal Loan for a Business Purpose?

The last decade has seen a growth in the business activities. Thanks to technology and capital. From small scale to large scale industries – every segment has witnessed a significant growth and this trend will continue. To make businesses flourish, banks and NBFCs ensure the smooth flow of capital. Varied business loan products are available in the market. However, one must note that everyone cannot get a business loan. For business loan, you need to have an established business with a required turnover and ITR income. So, what about those who want to establish their own business? We will answer this question later on. 

For those who want to get a business loan, but getting rejected for their business loan application, personal loan comes as a great savior. 

As the name indicates, Personal Loan can be used or any purpose, so as for your business also. And in the business, you can make use of personal loan for the following purposes – 

1. Establishing a new business – For establishing a business, you will not get a business loan. How will you get the fund? A Personal Loan is the answer.

2. Business Expansion – Your business is small, your less ITR income and turnover is not making you qualified for a business loan. In this case, go for a personal loan. Easily, you can avail it and can expand your business with the required capital. 

3. Meeting regular expenses – Take a personal loan and meet regular expenses for business operations. The capital may help you in your smooth business operations

4. Building up the credit score – If you want to take a business loan, you need to have good CIBIL Score. The personal loan amount can be taken to clear the old bills and debts, which will help eventually in rebuilding the credit score. Once you have good credit score, new avenues will be opened for availing loans. 

We discussed about significance, now we will focus on things that we should take into consideration while going for personal loan for a business 

1. The interest rate varies from one bank to another; for example, HDFC personal loan initiates from 11.25% while for other banks and lending institutions, it would be different. So, it’s always wise to do a comparative analysis of the personal loan products, so as to choose the best interest rate. 

2. Check your CIBL score- Good credit score makes a winning personal loan application. If your credit score is above 700, you will get easily approval rom banks. In case if it is below 700, you need to get it approved from a NBFC. Lenders check the credit score to analyze your creditworthiness, and on the basis of score, they approve or disapprove the loan.

3. Smooth Loan Approval- A strong reason why people opt for a personal loan for businesses is that they don’t need collateral for getting his loan. 

4. Easy repayment- Always check the repayment options and tie up with a bank whose repayment options are easy and convenient. 

              Personal Loan versus Business Loan which one to go with

So, you can go for a business loan, if you have an established business. But that is not the case with a personal loan. But for a axis bank personal loan, or any other bank you don’t need to have the collateral. Personal Loan can be used for a variety of purposes, including the start of a business. Again, if you need a limited money for some machinery related expenses, then a personal loan is a good option. Usually, business loans are of a higher amount. 

Conclusion– Taking a personal loan for the business is a good choice, but you must take into account the factors, mentioned above before applying for the same. Check with the lenders and compare their interest rates before applying for a personal finance.

Major Banks & NBFCs Personal Loan interest rates, I need to know about