Given the financial instability induced by recent times, it would be prudent to come up with additional income streams. You have the option to do multiple jobs or make an informed decision by starting a side business that does not require substantial capital.
To manage your finances without redeeming savings or investments, it would be wise to consider taking out a personal loan to help supplement your company’s financial needs. Although a personal loan to fund your business may sound risky as it entails hefty amounts, it may be the ideal solution to access instant funds. The best part is that you can benefit from personal loan offers like maximum loan amount, affordable interest rates, and flexible repayment tenure to better plan your budget. Here are the reasons why taking a personal loan to fund your business needs is the right choice:
Reasons why to Choose Personal Loan to Fund Your Business:
A personal loan serves multiple purposes, which means you do not need to specify your purpose for applying with your lender. It operates differently from home or car loans, wherein you can only use the loan amount for a specific purpose.
On the other hand, if you take a business loan, you will need to submit your proposal and other documents stating your cash flow and income. The age of your business also plays an essential role in the approval process, making it an arduous procedure to get funds for your startup.
As with personal loans, you have to fill out an application form, submit requisite documents, and wait for disbursement. The loan amount gets disbursed almost instantly after approval.
- Longer repayment tenure
The repayment scheme for a personal loan is generally fixed each month for a predetermined time. You have the liberty to choose a repayment tenure based on your preference. For instance, if you borrow Rs. 10 lakhs and choose to repay it within 48 months at a 12% personal loan interest rate, your monthly EMI would be Rs. 26329.
If you include your repayment amount into your monthly budget, you can easily manage your business’s finances. You will also be able to make necessary financial adjustments to ensure that you can afford to pay back your debt to the lender promptly.
- Lower interest rate
You can also get a lower personal loan interest rate compared to credit cards and payday loans. The personal loan interest rates usually start from 12%, but if you opt for credit cards, you will have to pay about 6% more. A lower interest rate is an opportunity for your business to grow and a boon for your entrepreneurial aspirations.
The lower the interest rate, the greater chance to repay the debt quicker. Also, saving money on your interest rate can help you add funds to your capital for further operational expansion.
- Higher loan amount
Another benefit of a personal loan amount is that you have a higher borrowing limit than credit cards. Some lenders even offer a maximum loan amount of Rs. 25 lakhs. It means that you can go for as much as you need and cover the cost of all necessary expenses of your business. Having a higher loan amount also minimizes the interest rate and fees that entail the loan application.
A personal loan is an unsecured loan, which means that borrowers are not required to pledge their assets as collateral. Most of the arrangements in a personal loan are unsecured. You can take a personal loan without the risk of losing your assets like your home or your shop. It allows you to concentrate on making profits and expand your business operations.
- Quicker loan disbursal
Unlike other secured loans, you do not have to wait too long to get your personal loan approved. The best thing about it is that the loan disbursal is quick. After filling out the application form and submitting the requisite documents, the loan amount is transferred to your registered account number within 30 minutes. However, a quicker loan disbursal is subject to the approval of your application. You need to ensure that the information you provide along with the documents are correct.
- Minimum eligibility requirement
Relaxed norms of eligibility enable almost any business to take a personal loan. Although you have to check with your lender to know their requirements, here are the common criteria to apply for a personal loan to fund your business
- You must be a salaried employee of either a private company or a public undertaking.
- You must earn a certain net income based on your lender’s policy.
- In the case of self-employed individuals, there is a minimum annual turnover depending on the industry or profession.
- You must be 21 years old at the time of application and 65 years old at the time of maturity.
- You must have a minimum of 750 CIBIL scores.
- The overall work experience required is one year, and you must have been working in the current organization for at least six months.
In a Nutshell
Getting a personal loan to fund your small business is probably the best decision you can take. You can avail of the best personal loan interest rate and flexible repayment tenure to better manage your business finances.