Learn what sets Business Loans apart from Personal Loans or Mortgages.
No business can flourish and keep generating profits without constant reinvestments towards evolution. Keeping a step ahead of the competition isn’t as easy as it sounds. So, if you run a business – regardless of its size – you will find yourself looking for reliable ways of financing. Business loans provide a great array of options to borrowing businesses, in terms of security, repayment schedule and interest rates. Personal loans, on the other hand, are much easily accessible. So, which is the better choice of the two? How do business loans and personal loans compare with each other?
A Tale of Two Lives
Keeping your business life detached from your personal life may sound easier than it really is. This becomes even more evident in case of finances. Regardless of the size of the business you run, keeping these two lives separate in two distinct silos is essential, as many successful industrialists can confirm.
Many businesses – particularly startups and other small businesses – however fail to do this. It can quickly boil down to the business finance issues creeping their way into your personal finances. From maintaining a dedicated business bank account to duly registering your business records each year, a number of simple yet highly effective methods can help you avoid this.
The same applies to choosing between business loans and personal loans. A business loan, more often than not, offers you the great advantage of markedly lower interest rates than personal loans. When you add to that the sheer robustness of business loan products available today, choosing between the two doesn’t sound like a tough ask.
Business loans are specialist funding products that aim to help businesses tackle large expenses. Almost all sorts of business expenses can be taken care of using various types of business loans . Please visit this page to see if your business qualifies for a business loan.
Personal loans are available to anyone who passes the relevant credit and affordability checks put in place by a lender. Borrowers take personal loans in their individual capacity.
Comparing Business Loans with Personal Loans
It’s a widely accepted fact that a business loan delivers much higher ‘value’ than a personal loan of the same size. Let’s see why this is so:
Barring mortgages and property loans, most personal loans are of relatively smaller amount. On the other hand, business loans can allow businesses to borrow money to the tune of hundreds of thousands of pounds. This is an important point to consider when choosing.
Most personal loans are short term loans with no collateral. So, they tend to carry much higher interest rates than business loans. While borrowing large sums of money, this factor counts heavily in favour of business loans.
Ease of Access
You may already know that from your local credit union to the nearest high-street lender, a number of creditors offer personal loans. Business loans, however, are only offered by specialist lenders who know how to weigh the risks of lending to businesses against the associated rewards.
Personal loans are usually processed and disbursed faster than business loans. This is mainly because of the smaller loan amount. Also, most borrowers choose local lenders for personal loans, resulting into faster payments. Business loans, on the contrary, involve larger amounts and more stringent criteria that contribute to relatively slower disbursement.
The approval for a personal loan largely hinges on the borrower’s credit history. It’s a lot more difficult to borrow in your personal capacity if you have bad credit. Businesses usually don’t have to face this problem, as many specialist lenders look at the overall potential of your business to repay, along with securities you can offer.
When It’s About Your Business, A Business Loan is the Way to Go!
It’s quite clear that when it comes to dealing with business expenses, a business loan holds many advantages over personal loans. To best benefit from these advantages, it’s also important to choose the business loan that suits your requirements, rather than accepting the first business loan offer that comes your way. At Commercial Finance Network, we help you find the most flexible and affordable business loan quotes from a diverse panel of UK-wide lenders.
Contact us today to speak with one of our Business Loan Experts and find out how we can help your business flourish.