Business Loan Vs. Personal Loan: Which One Is Right For You?

Are you starting a business? Read this article to determine the best option for your business needs by comparing personal loan & business loans. Visit Now!

21 Sep,2022 17:23 IST 38 views
Business Loan Vs. Personal Loan: Which One Is Right For You?

Individuals and entrepreneurs need to choose between a personal or a business loan when they want to raise immediate capital for personal or business purposes. However, the choice can become confusing based on the differences between both loans and the intent behind the borrowing need. Hence, it is vital to understand the difference between a personal and business loan to make informed capital-raising decisions.

Business Loan vs. Personal Loan: What Are Personal Loans?

Personal loans allow the borrower to fulfill any personal capital requirements. For example, you can take a personal loan to cover marriage expenses or pay college fees. They do not require collateral and have no restrictions on the end use of the loan amount. Most borrowers avail of a personal loan to cover small personal expenses.

Benefits Of Personal Loans

• There are no restrictions on the end use of the loan amount.
• There is no need to pledge any asset as collateral.
• The loan amount can be a great source of emergency cash.
• The loan process is hassle-free with quick disbursal.

Business Loan vs. Personal Loan: What Are Business Loans?

Business loans are financial products that banks and NBFCs offer to business owners who want to raise immediate capital to cover day-to-day expenses, buy equipment, or for expanding the business. Lenders analyze the business owner's creditworthiness through factors such as credit score and business turnover. Generally, such loans provide high loan amounts to business owners to ensure adequate capital for their business.

Benefits Of Business Loans

Business loans allow companies to raise quick capital to cover financial liabilities.
• Business loans include affordable and attractive interest rates.
• In most cases, there is no need to pledge any asset as collateral.
• Business loans are customized according to the business’s needs.

Business Vs Personal Loan: Which One Is Right For You?

You can evaluate a business vs personal loan from the following points and identify the right one for you.

1. Loan Amount:

Personal loans provide immediate capital up to Rs 5 lakh, while business loans can provide a loan amount up to Rs 30 lakh.

2. Eligibility Criteria:

With personal loans, lenders analyze the personal financial history, while lenders analyze personal and business financials in business loans.

3. Loan Tenure:

The loan tenure for personal loans, which is up to 3.5 years, is shorter when compared to the loan tenure of up to 5 years of business loans.

4. Interest Rates:

Interest rates on personal loans are higher than on business loans, resulting in higher EMIs for personal loan borrowers.

Avail Of A Personal Or Business Loan From IIFL Finance

IIFL Finance offers ideal personal and business loan products where you can avail of a personal loan amount of up to Rs 5 lakh and a business loan amount of up to Rs 30 lakh. The personal loan amount is disbursed within 24 hours, while the business loan amount is disbursed within 48 hours. With no need for collateral in the case of both loans, the rate of interest on both loan products is attractive and affordable.

FAQs:

Q.1: What is the typical duration for a personal and business loan approval?
Ans: IIFL Finance personal loan takes under 5 minutes, while business loans take 30 minutes for approval.

Q.2: What is the loan tenure of IIFL Finance personal and business loans?
Ans: The loan tenure for personal loans is 6 months, while it is between 12-60 months for business loans.

Q.3: What is the interest rate for IIFL Finance personal and business loans?
Ans: The interest rate for personal loans ranges from 11.75%-34%. Business loans have interest rates ranging from 11.25%-33.75%, depending on the loan amount.

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