You can use a personal loan to fund your business, but the question is: should you? Here are some common reasons you might use a personal loan for business:
You don’t yet own a business:
If you are in the beginning stages of your business and haven’t yet opened your doors or started generating revenue, you are unlikely to be able to find a business loan. Instead, a personal loan can help you finance startup costs and get your business off the ground.
You don’t have the time in business or revenue to qualify for business financing:
If you are already open for business but don’t qualify for financing due to the age of your business or low revenue, you can use a personal loan to keep things operating while you overcome early-business obstacles.
Your business is in a risky industry (such as food service):
Businesses in risky or undesirable industries often have trouble getting a business loan because lenders are afraid, they will not get their money back. Instead, you might find it easier to get a loan that is tied to your personal creditworthiness, not the creditworthiness of your business.
A personal loan is less expensive:
If you have strong personal credit and a low debt-to-income ratio, you might qualify for a personal loan with low rates and fees. This could be a better option than a business loan if your business creditworthiness is not nearly as good as your personal creditworthiness.
These are all good reasons for con