The truth of the matter is that getting a business loan can be complicated. Your business will have to meet eligibility criteria to get the loan. Also, it may not always be the most feasible to apply for a business loan.
Below are some circumstances which a personal loan might be better:
Starting A Business
One of the most important criterias to get a business loan is that your business should be operational. Banks are less likely to approve a business loan on the basis of an idea . No matter how promising your business idea and innovation is, there is no proof of performance. If you are just starting off your business, taking a personal loan instead of a business loan might be your best bet.
More often than not, banks require you to offer a collateral against your business loan application. And if you do not have one or if you are in the service sector, you may be required to provide a Co-Signer. If you cannot satisfy this requirement, your business loan application stands a great chance of being rejected. On the other hand personal loans are largely unsecured and do not have the requirement to provide any form of collateral or security.
Small Loan Amount
Business loans are meant for large loan amounts. And since the amount is large, the loan process will also take a longer time to be completed. Personal loans can be used for really substantial amount if that is what you need. You will need to submit lesser number of documents and get rid of your loan much faster and concentrate on running your business. You do not have to have a business plan for a personal loan for your business
Any bank will require you to provide a detailed plan for how you intend to use the loan amount for furthering your business. If you intend to use the money for various different facets of your business or as and when you require it or if your plan does not meet their expectations, your business loan application can get rejected. However, if you are applying for a personal loan, the bank does not require you to explain the purpose. You have the freedom to use the loan for any purpose (legal of course).
You need to determine if a business loan is ideal for your business requirement or the above mentioned situations, a personal loan will work better for your business when compared to business loan.