In the battle of Personal Loans vs Small Business Loans there is no winner and no loser. Each type of loan is designed specifically for with a certain purpose in mind. While the personal loan is meant to be used for personal expenses such as education, vacations or any purchase, the business loan is meant for investing in the company.
Below is a blow by blow analysis of the Personal Loans vs Small Business Loans fight which gives better insight into how they both are similar or dissimilar.
Annual Percentage Rate
The lenders for a small business loan can charge different amounts based on their personal plan. Some can offer an interest rate as low as 5.5% while another might charge hefty monthly fees and origination charges which can make them expensive.
For the personal loan the interest rates are either fixed or variable. The APR can be as low as 3.99% for the unsecured loans and even lower for secured term loans.
It seems that personal loans take the lead in the Personal Loans vs Small Business Loans competition when it comes to the APR.
For business loans the financial situation of the company is taken into account while evaluating an application. Usually the company should have been in business for at least a year and there is a minimum monthly revenue amount that is usually at least $10,000.
For a personal loan a good credit score and an unobjectionable credit history is desirable. Lenders also look at factors such as yearly income and previous debts before they approve an applicant.
Therefore, the eligibility criteria for personal loans are stricter and business loans stands victorious in this round of Personal Loans vs Small Business Loans.
To apply for a business loan a business plan and complete accounts of the company have to be attached with the application. Some lenders even require the borrower to visit the bank in person to apply for the loan since there is no online application form.
The personal loans application can be completed online in a matter of minutes where some lenders even offer pre-approvals.
The Personal Loans vs Small Business Loans analysis shows that each loan has its own pros and cons.