Whether you are expanding your small business or starting a new one, a steady influx of cash is a must. If you are confused between taking business or personal credit for your small business’ financial requirements, you are not alone.
Both have their specific features and benefits. But is one better than the other? Read on to settle the personal loan vs business loan debate.
The end-use of funds
When you apply for personal finance, there is no restriction on how you can spend the money. It means, while financing your business’s daily operations, you can also use the funds to cover your other immediate expenses.
On the other hand, business financing primarily funds new machinery, working capital, enterprise’s financial health, raw materials, etc.
Interest rates and collateral
When you apply for loans, interest rates are the first things you consider. The lower the loan rates are, the smaller EMIs you pay, and the easier the repayment is.
Since personal credit is unsecured, personal loan interest rates can be relatively higher against the loan amount sanctioned. Contrarily, business finance may or may not be collateral-free. This means, depending on your loan lender’s policies, loan amount, and the purpose of the loan, you may be required to pledge any asset.
At Tata Capital, you can avail of collateral-free personal financing with lucrative interest rates starting at 10.99%.
Additional Read: How Personal Loans Helps in Your Business?
Business finance eligibility conditions comprise stellar credit scores, profitable revenue, and an upward trend in turnover.
On the contrary, personal loan eligibilityis easier to fulfil. The eligibility conditions typically include a steady income, a stable job, and an excellent credit score, preferably over 750.
Lenders require detailed paperwork for approving business financing. It includes your company’s PAN, income tax returns or ITRs for the previous 2 years, partnership deed, audited balance sheet, KYC business papers, profit and loss accounts for at least 2 years, etc.
Compared to this, personal loans require minimal documentation such as proof of residence and identity, income documents, etc.
Additional Read: All You Need to Know about Personal Loan Agreement
Loan sanction and fund disbursal
Today’s world is all about being swift, and personal finance allows you to usher in funds for your business quickly. All you have to do is go to your preferred lender’s website, apply for the loan, and upload the necessary documents. At Tata Capital, your instant loan applications for personal finance are approved within seconds from submission.
On the other hand, lenders often take more time to verify the extensive paperwork submitted for business financing. You can get your loan approved in 3-5 working days.
While both financing options will help you get the capital you need, you can choose the one that best suits your repayment capability and financial requirements. If you require emergency funds for your small business, personal finance from a credible financier is all you need.
At Tata Capital, we offer instant personal loans at competitive interest rates, relaxed eligibility, and flexible repayment terms. Opt for structured EMI plans and conveniently repay the loans with pocket-friendly personal loan EMIs.
Want to know more? Visit our website today.