People utilize personal loans for a number of reasons, such as consolidating debts, paying for a medical debt or for costly auto repairs.
But there is something else the average consumer needs to know: a personal loan can be used for your small business.
Despite the label, a personal loan could just be what is needed to maintain your business. The personal microloan can be used for certain expenses such as:
• Equipment (things like printers, tools, copiers, manufacturing equipment, cubicles, etc.)
• Office space (either to purchase or rent)
• Marketing and advertising (digital, promotions, print, etc.)
For any type of business expense, if your business does not have the extra capital but needs cash to grow, then a personal microloan is a feasible option.
Small Business Loan vs. Personal Loan
Most small businesses that require necessary funds in order to grow their business typically search for a small business loan. This makes sense as a small business loan is generally beneficial to the small business owner.
In certain situations, the small business loan assists the business owner to purchase large ticket items, such equipment, inventory, or raw materials. However, just because the small business loan is the industry standard, it does not always make it the correct solution.
The biggest problem with a small business loan is the stringent requirements. Not only does this hold true with the eligibility requirements, but it also comes into play during the application process. Here are some of the biggest challenges:
• Lengthy application process that can eat up hours of valuable time
• Documentation requirements, such as providing a business plan, tax returns, references, and financial data
• It can take a long time to receive the funds (even after you get an approval), as the entire process can take up to 90 days
• There are as many as seven different types of small business loans… choosing the right one for you could take some time
Although it’s common to initially assume that a small business loan is the best choice, you may find that these requirements are difficult to meet or will take longer than you want to get your business moving.