It takes money to make money. And if you need funds to make your business plan a reality, a personal loan can close the gap. Start with Benzinga’s review of the best personal loans for business.
Quick Look at the Best Personal Loans for Businesses:
- Best for Emergency Loans: Avant
- Best for Fair to Excellent Credit: Best Egg
- Best for Little to No Credit: NetCredit
- Best for Home Improvement Loans: Upgrade
- Best for Comparing Lenders: Credible
Best Personal Loans for Business
Because personal loans are exactly as they sound — a chunk of cash lent on credit to use for whatever you like — the money can serve many purposes. This includes quick cash to get your business off the ground, buy needed supplies or spruce up your work-from-home space.
Read on to learn more about the best lenders and loan comparison services for personal loans.
Avant
Avant is a lender businesses can turn to when they must access needed capital. When you apply with Avant, you can complete the entire process online, pay a low origination fee, never worry about a prepayment fee and manage your loan online.
The website is easy to view even on a mobile device, and your business can take advantage of:
- No collateral, unsecured financing
- An online loan eligibility calculator
- Loans that could be as high as $35,000
- A range of loan terms that suit your situation
With a great customer service team and available funding for any number of situations, you can turn to Avant when it’s time to finance your expansion, equipment, etc. You can get the money you need right now, continue your work and keep your business on the path to success.
Best Egg
Best Egg has been around since 2014, offering personal loans to borrowers with any need at all. The range of loan terms and values is a little narrower than other brands, but the customer service team is exemplary, the firm has an A+ rating from the BBB and it helps those with fair to excellent credit.
Best Egg also offers:
- Competitive rates
- No prepayment fee
- Affordable origination fees
You can learn more about Best Egg through social media, and you can even reach out to them through these channels. Remember, though, you should check the minimum and maximum loan amounts for your state as they can vary.
NetCredit
NetCredit is a good place for your business to turn when you have no credit or, perhaps, you’ve experienced some struggles with your credit in the past. You can get approved in funded in just a few days, and there are no prepayment fees.
However, you should make sure you know if NetCredit is offered in your state because the platform is not available in CO, CT, IA, ME, MD, NV, NH, NH, NY, NC, PA, VT, VA, WV and DC.
You can check your chances of pre-approval with a soft credit pull, but interest rates could be high depending on your credit score. The firm also offers:
- Low origination fees
- Nominal late fees
- A wide range of loan terms and values
Consider NetCredit when you want to get your business going in the right direction or need capital for a specific project.
Upgrade
Upgrade is a great place for businesses to get a fast approval as it markets your loan to its many partners. You can choose from a wide range of terms and values, but you will notice that the loans you’re offered could be quite diverse depending on how much the lender wants to charge.
Even though Upgrade doesn’t lend to your business directly, it ensures that you have the best experience and find the funding you’ve been looking for.
Because you’re a business owner, you can use the funds you borrow for any purpose, and you can work out repayment, refinancing and other issues with your lender. If you need additional support, however, you can always reach back out to Upgrade for help.
Credible
Credible is another loan aggregator that brings together all the best deals so that you can choose the best loan for your business. The platform puts you in touch with:
- A massive range of loan values, terms and rates
- A customer service team that can help you make wise choices
- A large segment of lenders who can help your business
Remember, when you work with a company like Credible, you need to make sure you understand how much the lender you choose can charge in your state. Yes, you can reach back out Credible for help, but you will ultimately pay the lender and deal with their terms. If you ever want to refinance a business loan, you can come back to Credible to find another create option.
*Disclaimer: We accept advertising compensation from companies that appear on this site, which impacts the location and order in which brands (and/or their products) are presented, and also impacts the score that is assigned to it. Company lists on this page DO NOT imply endorsement. We do not feature all providers on the market.
Types of Personal Loans for Business
There are many things that define a personal loan. What you’re offered and what you choose depends on your unique situation. A loan comparison service like Credible is a way you can compare all your options.
Most personal loans are general use, but some may require you to disclose your intended use or offer different loan conditions for different uses. The conditions of a loan also depend on the circumstances. Your unique financial snapshot (including your credit) and the way a lender analyzes it determines if you are offered a secured, unsecured, fixed or variable rate loan.
Secured Loans
If a lender asks that you put up collateral to back a loan, you’re being offered a secured loan. These types of loans pose less risk to the lender, as an asset like your house or bank account balance may be used to secure the loan.
Something concerning on your credit report may cause a lender to ask you for collateral. This means while there is less risk to the lender, you’re taking on more personal risk. Be sure you are able to meet the terms of the loan so you don’t risk your assets or your credit.
Unsecured Loans
An unsecured personal loan doesn’t require collateral to back the loan. While you may get a higher loan approval amount with a secured loan, these are perfect if you don’t have assets to put up as collateral.
BadCreditLoans.com offers general personal and business loans up to $10,000. This service connects you with lenders providing unsecured loans who are willing to work with bruised credit.
These loans can also be used to build credit if you’re a young entrepreneur just starting out. Pay back the small loans within the terms to establish creditworthiness to lenders. This will position you as a business owner who lenders will trust with the necessary capital in the future.
If you’re a sole proprietor, you might choose a platform like MoneyLion to obtain a small loan that will help you keep your business going.
Fixed-Rate Loans vs Variable-Rate Loans
Although many lenders offer both options, fixed-rate loans are preferable to most — you know exactly what you’re getting into financially. A fixed rate allows you to calculate how much interest you’ll pay overall. But these rates may be higher or come with larger monthly payment plans, which can be troublesome if all your money is tied up in your business while you’re working toward a profit.
The higher rates and larger monthly payments reduce a lender’s risk while ensuring the loan is profitable for them. The only other downside is that your loan rate doesn’t go down if interest rates fall, but this is usually outweighed by the rest of the advantages.
A variable rate loan may offer some perks to consider. Although the interest rate may leave you owing more than the loan itself was worth, you might have to use a variable rate loan if you can’t get approved for a fixed-rate loan or need low monthly payments and a lower rate to save on cash now.
If you think that you’ll see a worthwhile return from using a variable-rate personal loan to invest in your business, this can still be a savvy financial move.
Personal Loan Requirements and Criteria
Although these criteria vary by lender, most personal loans approval decisions depend on the following:
- Your FICO credit score
- Debt-to-income ratio
- Delinquencies or negative remarks on your credit report
- Credit utilization (your credit balance vs. your credit limit)
- Open accounts with a positive standing (payments being made on time and so forth)
Other considerations may be made depending on your unique situation.
Personal Loan Considerations
Although a personal loan may have looser usage restrictions than other types of loans, it’s still a serious financial obligation. Be sure you are clear on your loan terms before you sign for a loan. Following them to the letter is important to keep your credit history spot-free, an important quality if you’ll need further credit in the future.
Look out for sketchy-looking lenders or loans, especially online. It’s best practice to go through trusted lenders. If it seems too good to be true, it probably is. Loan comparison services like Even work with vetted lenders to make your search less risky.
You can also use the Lender Match service provided by the Small Business Administration (SBA). Its loan match service will connect you with vetted lenders who offer low rates and meet certain SBA guidelines meant to protect both borrowers and lenders.
Personal Loans vs. Credit Cards
While many businesses use business credit cards for day-to-day spending, a personal loan can be more beneficial in certain situations.
Each a line of credit, credit cards have revolving balances while a personal loan closes once it’s paid off. A personal loan is great for a large, 1-time purchase that you can pay off in installments like renovations or pricey commercial equipment. You can streamline your business-related debt payments by consolidating them with a low-rate personal loan through a service like Payoff.
Credit cards usually have variable rates while personal loans have fixed rates. Personal loans may have higher credit limits than credit cards. Credit cards can cover smaller or recurring purchases that you can pay off at your discretion.
Fund Your Business Now
Financing your business with a personal loan may be the right funding solution for you. For example, Credible provides prequalified rates to help you find the right personal loan for business today.
Frequently Asked Questions
Can business obtain small loans?
Yes, businesses can use small loans to manage expenses, and they could be personal loans obtained by owners or managers.
Should you apply for a personal loan to fund a business?
A personal loan can be used to fund a business, but you should make sure that you can qualify for the loan before applying and impacting your credit.
Is it smart to get a personal loan for business?
If you need money to open or grow a busisness and don’t have access to a business loan, a personal loan may be a good choice.