There are some essential differences between the two that you should know about. First, a personal loan is usually accessible for small amounts, while the interest rate on a business loan can be much higher. In addition, a personal loan is generally for short-term purposes, while a business loan is usually for long-term financing. Business loan applications are typically submitted online and can be completed in minutes. The application process is entirely confidential, and the applicant will receive a decision within 24 hours or less. A business loan can be used to start up a new business, expand an existing business or buy equipment.
Business loan programs offer a variety of lenders and loan amounts. You can apply for a business loan with a bank, credit union, or even some lenders that specialize in small businesses. Small business loans are typically secured by collateral such as cash, receivables, or inventory. The collateral secures the loan and ensures that the lender will be repaid if the borrower fails to repay the loan. The interest rate on a small business loan can be as high as 15 percent, depending on the amount of borrowed money and the type of collateral used to secure the loan.
The application process for a small business loan is entirely confidential, and you need not disclose personal information such as your Social Security number or bank account numbers. There are also no security deposits required for small business loans, so you don’t have to put up any assets as collateral with your application. The lender will send you a check when a business loan is approved.
If you consider buying equipment such as computers, copiers, or other office equipment, many lenders specialize in small businesses. These lenders have a variety of loans and loan amounts to choose from while providing an easy application process and low-interest rates. Also, these loans are risk-free, and if you default on your loan, there is no collateral to be forfeited.
Many life insurance companies offer small business loans, which can be an excellent way to borrow the money needed to purchase a piece of equipment. The loans are often structured as term life insurance policies, and the annual premium payments are considered installments of the loan repayment, which may make them more affordable than traditional secured loans.
In conclusion, business loans are available to almost every business, big or small. The only requirement is that you meet all state requirements for your type of business, and then you will be eligible for a loan.