There are a lot of stigmas which are related to taking a loan; however, if you can rid yourself of this feeling, loans can prove to be one of the most financial supports made available to borrowers by a bank, NBFC, or any financial institution. While taking a loan is indeed the quickest solution for instant funds requirements, getting the right one depending on your financial needs, is the real trick to solving your financial problems. While collateral or asset-specific loans are available, like a home loan, loan against property(LAP), or vehicle loan, certain loans do not require collateral, meaning you don’t have to pledge your assets with the lender. These types of loans are called unsecured loans, and examples of this include Personal Loan and Business Loan. You can apply for a quick approval personal loan and business loan online through different online lending platforms. Let’s have a look at two scenarios to understand the difference between a Personal Loan and a Business Loan.
Under What Conditions Is a Business Loan Better for You?
Unlike Personal Loans, Business Loans are designed completely differently. As the name suggests, a Business Loan is meant to be used for business purposes. As it is an unsecured loan, a Business Loan can be used for purposes ranging from expanding your business to starting a newer business at markets, improvising the infrastructure of your existing place, hiring new employees, or considering any aspect of running a business that needs funds.
Due to the high demand and scarcity of availability of the product, the process of securing a loan for online Business has been simplified by many lenders. Opting for a Business Loan, the documents required are similar to personal and business-related aspects, and the money disbursed in your account is to be used for business-related activities. But if you plan it in a better way, you can utilize the loan according to your convenience. Some of the few important advantages of taking a Business Loan are as follows:
You can use the available funds for various business-related activities without sharing the stakes with investors or shareholders.
Another interesting reason to opt for a business loan is that a borrower can avail of tax benefits to an extent.
My Mudra offers the best services when it comes to providing loans. They even offer loans to business owners that are designed to meet the needs of a business, such as working capital, expansion of business, purchasing business inventory, etc. Apply online for a business loan and start your business today.
Some of the salient features of My Mudra Business Loan are:
- No CollateralÂ
- Minimal Paperwork
- Free online EMI calculatorÂ
- Quick disbursal
- Competitive interest rate
- Hassle-free, application process
- Flexible tenure (up to 84 months)
Pros and Cons of Business Loans:
Below are the pros and cons of a business loan
Pros of Business Loans
- High loan amounts.
- Longer tenure.
- It Builds your business credit history.
- Few personal liabilities, in some cases.
Cons of Business Loans
- Strict qualification requirements.
- Slow funding process.
Under What Conditions Is a Personal Loan Better for You?
There are many benefits to opting for a Personal Loan. The loan process is quick, requires less documentation, and needs no security or collateral to be pledged with the lender. But the question is should you go for it when you need funds? Well, the answer to that question depends on an individual’s needs and priorities. If you need immediate funds and have a plan on how you will pay off the installments, then you can go for a Personal Loan. But when it comes to using personal loans for business purposes, it is not an ideal option and must be avoided. As already mentioned, an unsecured loan, a Personal Loan does not require any security or collateral to get the paperless personal loan online. But there are a few points of Personal Loans which you should keep in mind:
Mentioned that the personal loan is collateral-free, and the interest rates are much higher as compared to a secured loan, like a Home Loan, LAP, or Vehicle Loan.
If you are thinking of getting a Personal Loan online for business expenses, then you must keep in mind that the loan amount of a Personal Loan is less as compared to a Business Loan amount.
To get eligibility as a borrower for a Personal Loan, you need to have a good CIBIL credit score, that is 700 or above.
There are many different lenders out there in the market who offer Personal Loan; My Mudra is one of the trusted lenders. My Mudra offers an online platform to apply for different loans with full customer support which helps people in the whole process starting from loan application to loan disbursement in your bank account. My Mudra gives access to a free online EMI calculator, and credit score checker and offers an easy paperless seamless loan disbursement process.
Features of Personal Loan from My Mudra Fincorp are:
- Quick DisbursementÂ
- Collateral-Free
- Competitive Interest Rates
- Flexible repayment options
- Minimal paperwork
- No hidden fees
- Hassle-free process
Pros and Cons of Personal Loans for Business Purposes:
Below are the pros and cons of personal loans for business purposes
Pros of Personal Loan
- Flexible qualification requirements.
- Quick funding process.
- Loan funding can be used for business purposes too.
Cons of Personal Loan
- No building of business credit history.
- Personal liability for debt.
- Increase in personal debt-to-income ratio.
How to decide between a Personal Loan or vs Business Loan: Which should you choose?
There can be an out-turn in choosing a personal loan over a business loan. It is suggested to keep your finances separate from your business finances.Â
Comparing the different aspects of a personal loan with those of a business loan can help you determine which is the right type of loan for your business. Before you mix the line between the two, give some attention to the following:
- Credit score impact
- Qualification requirements
- Personal liability and debt
- Loan terms (loan amount, interest rate, repayment period, repayment amount, and funding speed)
