Finance is a constant requirement for any business. Whether you’re starting off or growing, you’ll need a substantial amount of funds to keep going. Entrepreneurs often look for loans to meet their business needs.
At such times, many seek out a business loan. As the name suggests, a business loan might seem apt to fund your business. However, sometimes it’s hard to qualify for it. Business loans have stringent policies that require you to present your business plan, income records, and business statements. Many start-ups usually do not have such a setup for the lender to evaluate, making these loans hard to obtain. In such a situation, a Personal Loan might seem like a much more convenient option. Let’s know the differences between Personal Loan vs. business loan and how to apply for a Personal Loan.
Why get a Personal Loan for business?
Personal Loans are given to fund personal needs, including your business needs. It is not a loan with security deposit. You can use the funds as your capital investment or as your working capital. The lender will not question you about how you intend to use the loan amount. Unlike a business loan, where the lender might want to assess multiple documents, a Personal Loan needs minimal documentation and subsequently has a smoother process.
How to get a Personal Loan for business?
With such ease involved in the process, you can apply for a Personal Loan from banks or financial institutions within minutes. Some lenders like Bajaj Finserv give you instant Personal Loan offers. This further makes it easier to apply and avail such funding. Personal Loans for self-employed individuals with their own business are offered based on some simple eligibility criteria.
A high credit score indicates creditworthiness. Therefore, the more the credit score, the better are your chances of getting a Personal Loan for the business. If you have a credit score of 700 to 900, it is not only easier to get the loan sanctioned, but you also get a reasonable rate of interest on it.
Lenders often consider the monthly income when sanctioning Personal Loans to salaried individuals. However, when it comes to Personal Loans for self-employe, the bank or financial institute often evaluate the stability of your business. You need to prove that your current business has been up and running for at least three years when you apply for a Personal Loan.
Lenders also need to be sure that you have the ability to repay back the loan. In addition to proving that your business has been around for three years, you also have to provide a few documents that will help the lender know how your business is doing. For this, you need to submit your IT returns for at least the past one year and your previous year’s turnover audited by a CA. This will help the lender understand your repayment capability.
Before you go about looking for how to apply for a Personal Loan, you need to match the above-mentioned criteria. You can use the Personal Loan eligibility calculator to do so too. Once you have check listed them all, it will be much simpler to get a Personal Loan for your business.
Published by silv Watson