When it comes to loans, business loans and personal loans are two of the most common. But what are the differences between them? What are personal loans used for? Keep reading to discover the answers.
What Is a Business Loan?
Simply put, a business loan is a loan intended for business purposes. Needless to say, businesses have all kinds of needs, so the proceeds from a business loan can be used in a variety of ways, including:
- Purchasing real estate
- Renovating facilities
- As working capital
- Purchasing inventory
- Purchasing equipment
SBA loans are one of the best alternatives for business loans. Since they are backed by the Small Business Administration (SBA), these loans offer some unique benefits designed with the needs of business owners in mind.
SBA loans usually have less stringent requirements than other types of loans. They also tend to have lower down payment conditions and offer longer repayment terms.
The two most popular SBA lending programs are 7(a) loans and 504 loans. To discover which one works for you, check out this previous post.
Business Loans vs. Personal Loans: What Is the Difference?
As its name suggests, a personal loan is a sum of money you borrow from an institution for personal reasons. This may include everything from purchasing an engagement ring to refinancing credit card debt or paying for your vacations.
Personal loans, also known as signature loans or unsecured loans, are typically delivered as a one-time payment that you must repay in monthly statements. Obviously, in addition to repaying the original sum you borrowed, you will also be paying interests and other fees stipulated in your loan agreement.
All in all, the main difference between business loans and personal loans is the way you use the funds. With a business loan, the money is used to maintain or grow your business. With a personal loan, on the other hand, the funds are used for any purpose you see fit.
Another important difference is the interest rate applied to both types of loans. Business loans tend to offer lower interest rates because the guarantees that a business can offer are usually more solid than those that a person can provide.
Gellyfish: Certainty of Execution in Business Loans
Looking for SBA loans in California, or anywhere in the United States? Gellyfish is here to help. We offer financing with the certainty of execution you need to take your business to the next level.
Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our full range of financing options