These days business is the most emerging sector to grow rapidly and set up a strong image of yours in the society. A successful business will give you both name and fame quickly. However, according to FourCreeds for any business’s smooth running, financing or a proper business loan is the primary requirement.
This will help with adequate cash flow, proper management, adopting new and advanced technology, and the establishment of new equipment required for the production process.
In India Government is also trying to improve the MSME sectors by the implementation of new schemes. A business holder can get the required amount of CGTMSE loan with specific terms and conditions through the schemes.
During the last decade, the financial institutions just boomed up in the market, so it became easy for any business holder to get business loan approval quickly.
Several loans are offered by the lending institutions like banks, NBFC, in order to provide business loans and personal loans. However, it’s up to you what kind of loan you should choose that suits best for your business growth.
Benefits of Choosing a Business Loan:
- Finances kept separately:
During the approval process of a small MSME business loan, personal finance is not considered. This will not only help in saving a lot of time but also reduces the tax amount.
- Limitation in Liability:
Your liability can be increased depending on the type of business and legal documents you provide during the process.
- Building up credit in Business:
If you are applying for an MSME loan, then your business’s credit will increase. This will help a lot more if you take any loan in the future. The lenders will trust you and come forward to approve your business loan quickly.
- Huge loan amount:
If you need a considerable amount of money, then a business loan is a great option. In a personal loan, there is a limitation of the loan amount. But in the business loan, you will get the loan amount as per your requirement.
- Interest rate is less:
In an MSME loan, the interest rate is less than a personal loan. As per RBI data, the business loan interest rate varies from 2%- 13%, whereas in personal loans, the interest rate ranges from 6%-36%.
Benefits of Choosing a Personal Loan:
- Quick Approval process:
In a personal loan, the loan approval process is faster as you do not require submitting several documents related to business. The process becomes much quicker if you are not in the business for a more extended period.
- Faster funding:
In a personal loan, the finance amount is comparatively less with little paperwork or documentation. After completion of a few processes, the funds get deposited quickly.
- No requirement of Collateral:
Usually, personal loans are unsecured business loans. So you do not need to give any collateral for getting the loan amount.
However, if you opt for a business loan from Zip loan, you can avail of an unsecured business loan, without providing any sort of security or collateral.
Both Personal and business loan have their pros and cons in different ways. So it will be an excellent choice for you if you will choose the loan after going through all the details. It will be best if you will choose the loan that is best suited for your business.
- Where personal Loans can be used?
Personal loans can be used for any kind of purpose. It is not required to sign the agreement where you will use this loan amount. However, specific lenders set some terms and conditions mentioning where personal loans can be used.
- Can personal loans used for business purposes?
Yes, you can use personal loans for business purposes also. But while repaying the amount, you are solely responsible for it, not the business.
- What is a business loan?
It is a particular type of loan approved by the financial institution to boost your business. Both secured and unsecured business loans available. It’s up to you what kind of loan you need for your business.