A personal loan for business (or, personal business loan) is a loan you take out as an individual but use for business purposes. They’re good for new business without established credit, and often have lower interest rates than other new-business options.
3 to 5 years
5.99 - 36% APR
As FaaS as 1 day
How do Personal Business Loans Work?
Personal business loans depend on your personal credit score, as opposed to your business’s credit history. The money is lent to you, as an individual, and it’s your personal responsibility to pay it back.=
Personal loans for business give new businesses a way to get off the ground. Business founders often apply for there personal loans through their own bank, but like term loans and many other business loans, there’s also the option to apply via online loan servicers.
Pros & Cons
Pros of a Personal Business Loan
- Tends to be less expensive than a business loan
- Don’t need business history
- Repaid daily, weekly or monthly
Cons of a Personal Business Loan
- Can only borrow up to $40K
- Effects your personal credit
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Who Qualifies for a Personal Business Loan?
To qualify for a personal business loan, you need a personal credit score above 580 and good financial history. Nothing dealing with your business will be considered in your application.
How Do You Apply a Personal Business Loan?
You can apply for a personal business loan with a bank or with an online lender. As with a usual business loan, banks will require more paperwork, a longer application process and longer waiting time. Online lenders will provide a more time-efficient process and require fewer documents. FaaSfunds will help with the application process and provide you with the best options for using a personal loan to help fund your business.
What You're Going to Need:
- Driver’s License
- Bank account number
- Credit Score
- Pay Stubs and W-2s
- Personal tax return
What Else Should You Know About Personal Business Loans?
Personal business loans mostly depend on your personal credit score, so your business’s financial history doesn’t matter.
The fundamentals are:
- Lenders make the loan to you directly, you use it for your business, and then you must pay it back directly.
- You must have good personal credit.
- Most lenders will only lend up to $40,000.
- Personal business loans often require closing fees.
When Does a Personal Business Loan Make Sense?
It makes the most sense to use a personal business loan when your business is new. When your business doesn’t have a financial history, it’s nearly impossible to receive a loan on behalf of it. If you’re looking to start a business you believe would have a large payoff, and you have a strong personal credit score, getting a personal loan for business is a good idea.
If you prefer to keep your personal and business finances completely separate, this type of loan might not be the best for you.
Not sure if a personal business loan is right for you?
Let us walk you through your options and help you decide which program is right for you.
How Much Does a Personal Business Loan Cost?
A personal business loan is a kind of term loan – you pay a monthly payment over a certain amount of time, plus the interest generated. Interest rates will vary based on your credit but usually remain pretty low compared to regular business loans.
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Let one of our FaaSfunds financial experts help lead you through the process and guide you down the best path for your business financing needs.