Starting a Business with a Personal Loan [3 Loan Rules]

Times have changed and interest rates aren’t what they were in the 1980s. Borrowing for business is not only no longer dangerous but might be the smartest financial move you make.

Understand how to use a loan to start a business and where to find the best startup money.

Why You Might Consider Using a Loan to Start a Business

The reason most new businesses fail is for lack of capital, not being able to get the money to continue in business. 

More than three-in-four businesses run for up to five years before running out of money because sales can’t keep up with expenses. So it turns out that getting a loan might actually be able to keep you in business rather than leading you to ruin.

Business Loan vs Personal Loan

Business loans almost always offer the lower interest rate because the money is secured by business assets. Lenders can repossess or force you to sell business assets to meet loan payments. 

Business Loan vs Personal Loan

That’s not the case with a personal loan which requires no collateral. You won’t be forced to sell your home or other assets and cannot be pushed into bankruptcy on a personal loan. 

Using a Personal Loan for Business Startup

Start the business as much as possible on saved money, at least to the point of having a workable business plan and nearing sales. 

How to Qualify for a Business Loan

Minimum requirements for a business loan are generally a year or more in business and current sales. Getting the best rates means higher sales in the $100,000+ area and sales from repeatable sources. 

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