Over the past decade, our society has begun to live in a completely new way. This fact can be attributed to the fact that lending has become a part of our modern life. At the moment, it is difficult to meet a person with an average income who has never taken a loan.
In this article, we want to talk about the difference between obtaining a business loan and a personal loan.
For this comparison, it will be necessary to highlight the most basic criteria, namely: the necessary documents for applying for a loan, eligibility criteria, consideration period, interest.
What documents are required to get a loan?
If we are talking about documents, we want to assure you right away that in order to get a personal loan, much fewer documents will be required than for getting a business loan.
To get a personal loan, you need a regular and standard package of documents. Usually, this is a state-issued ID and driver’s license, as well as, proof of income. Then you need to fill out a questionnaire for getting a loan and wait for the bank’s result. If the loan amount is very high, then it would be desirable to provide documents for the car or property. But it should not be confused with a secured loan.
The set of documents is actually standard, and you should understand that the more documents you can provide, the more likely you get approval. But don’t forget about your credit history. If your credit history is bad, then you can only get a secured loan. And if your credit history is excellent, then you can get a big loan on only having a state-issued ID.
As for business loans, everything is much more complicated. If we are also talking about a loan secured by a car or apartment, then there will be no problems. But you must understand the full responsibility and take into account all the risks that may arise. But if you want to get a business loan without collateral, then you will need to figure out what is needed to get a loan. But first, it all depends on what stage your business is at. It is very important!
If you already have an operating company and you have all the statements certified by an accountant, then it will be much easier to get a loan. Another thing is when it comes to a loan to start a business from scratch. Such a loan will require not only all the documents but also a perfectly pre-pared business plan. After all, the bank takes a high risk when it gives a large amount of money and wants to be sure you will pay it off.
So, in order to get a loan for business development, you need to prepare very well. Of course, each bank has its own conditions for issuing a loan, and you can get more detailed information only from bank employees.
As for a personal loan, the loan application will be considered rather quickly. Earlier it took several days, but now you can get a loan in 20 – 30 minutes.
To get a business loan, you will need to go through several stages. To begin with, all documents will be reviewed by bank employees, various risk managers, and the security service. This process can take more than one month, but usually, a decision is made within 1-2 weeks.
Personal loans are considered the most expensive in terms of interest rates. As for the interest on business loans, they are much lower than the rates for personal loans. On average, the interest rate on personal loans is 20%. As for loans for business, the average rate is about 10-15%.
Use of funds
If you received a personal loan, you can spend it however you want. But a business loan is another matter.
At any time, bank employees can visit you and see what the funds have been spent on. The bank will keep track of where you spent these funds. And if you decide to cheat and spent money on your own needs, you can get a prison sentence.
Category: Online Loans
Tags: cash advance, funding issue, loan, online lenders, payday loans