When it comes to securing additional funding, it’s vital to select the right product that suits your needs. With this in mind, Think Business Loans outlines the differences between personal and business loans and which is best suited for you.
What is a Personal Loan?
Personal loans come with both fixed and variable interest rates between 1 and 7 years, with some lenders offering a starting APR as low as 3.99%.
The maximum loan amount of these loans can be as high as £100,000 and can be used for almost anything. Typically, personal loans are used for purchasing a car, decorating your home or even to finance a wedding.
However, personal finance lenders will heavily relying on a good credit score in order to determine your ability to payback the loan. As a result, it can be difficult for those with a bad score to get the funding you need at an affordable rate.
What is a small business loan?
A small business loan is a great way for UK SMEs to obtain the funding they need to grow their business. Lenders can charge as low as 1.8%, with both short and long term finance options available to suit each individual situation.
Unlike personal finance, business loans offer a much higher amount, with some lenders offering up to £5,000,000. However, the amount you are offered will depend on your eligibility. With small business loans, your eligibility all depends on your personal finances and the type of business plan you submit. Most lenders will require your business to have been trading for a year and have at least £10,000 revenue.
Which loan should I apply for?
If you’re looking to invest in your company, then commercial finance is the way forward. A business loan can allow you to finance equipment purchases, payroll and your tax bills at a cost that works with your business.
While it maybe tempting to apply for a personal loan to fund your business, we advise that you do not do this. If your business is unable to pay back the loan consistently or ends up defaulting, it will severely impact your credit score.
Apply for a business loan
Applying for a small business loan has never been so easy. At Think Business Loans, our iFunds technology allows you to compare the whole lending market at just the click of a button.
Our lending managers are able to help you get the funding you need within 24 hours of your application. If you would like more information about the best commercial finance product for you, contact our team today on 0203 880 9880.
Jessica Court graduated from the University of Portsmouth in 2017 with a bachelor’s degree in Media Studies. She has previously worked within the In... Explore Author