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SCALING UP BUSINESS WITH A PERSONAL LOAN: HERE’S WHAT YOU NEED TO KNOW
A personal loan is an amount of money that people borrow for several purposes. Personal loans come with interest that can be used for home renovation, marriage purposes, or any to tackle any other such financial needs. They can also be used for businesses; however, many business owners and entrepreneurs find it skeptical to take a personal loan for their business. Often the question that arises is whether a personal loan can scale up the business. In this blog, we will see a few points when you should apply for a personal loan that will help you scale your business effectively.
Understanding a Personal Loan
Personal loans are offered by banks, non-banking financial corporations, credit unions, and online lenders that you can use for personal expenses. The amount borrowed must be repaid with the interest over a tenure that will be selected by you at the time of borrowing the loan. Personal loans are typically used for –
- Moving expenses
- Medical bills
- Marriage expenses
- Home renovation
- Personal loans for self-employed or business owners
Personals loans have no restrictions on their usage unlike loans like car loans, home loans, education loans, etc., which are used for specific purposes.
When to Apply for a Personal Loan?
There are several factors that you will need to keep in mind while taking a personal loan for your business. If you want to scale up your business using a personal loan, here is when you should apply for it –
- If the Requirement is small
The best time to take a personal loan to start or scale up a business is when the amount of money is relatively small. The smaller the amount is, the lower the interest will be. Adding to this, the disbursal also will be fast and hassle-free. Also, personal loans don’t require excessive documentation, making it easier for business owners to avail the needed financial assistance. However, make sure to check the eligibility for a personal loan before applying for it.
- If You Don’t Have a Collateral
Many times, lenders of business loans ask for collateral if the borrowed amount exceeds a certain limit. However, with personal loans, there is no need to worry about this. Personal loans are unsecured loans and the best for businesses. If you don’t have collateral or are not willing to put a price on something that you hold precious, a personal loan has got you covered. From an amount of Rs. 50,000 to an amount of Rs. 5 lakh and more, you can scale up your business with a personal loan without pledging your valuables as collateral.
- If You Have a Set Time
Another time when a personal loan comes in handy in scaling up your business is when you have a set time. Meaning, if your aim is only to overcome a temporary financial hiccup in your business for a particular period (say 6 months or more), applying for a personal loan is the right thing to do. That being said, if you are sure of repaying the borrowed amount within the tenure that you have selected, go for a personal loan without any second doubt.
- If you are in a Hurry
If you are in a rush to expand or scale up your business, then yes – a personal loan is the best option that is available for you. A personal loan for a businessman is easy to avail, sanctioned in a couple of days, and most importantly, it requires minimal documentation, making the entire process smoother and quicker. Adding to this, personal loans are quite flexible when compared to the other ones.
Other than these, you can get a personal loan for business when you have exhausted all the other options. But what you need to keep in mind is that the personal loan amount will depend on your credit profile. If you already have an existing loan and you maintain a good repayment profile without any defaults, chances are you will easily get a personal loan. With these in mind, it can be positively established that you can boost your business with a personal loan by meeting the eligibility required; however, always consider the aforementioned factors.
Muthoot Finance is India’s most trusted financial services company that offers a variety of loans for your financial needs. From gold loans to vehicle loans to personal loans for scaling up business and other purposes, you can select from a range of options. Adding to this, we also offer other financial services like forex, money transfer, and so on. Muthoot Finance also offers business loans for entrepreneurs and small businesses.