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Access to Capital – Personal Loan

Today’s Tip

Best Practice:  Creating and growing a brand requires capital. Getting a personal loan may be easier to get for a start-up business.

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Today’s Article:  Access to Capital – Personal Loan

Getting a personal loan may be easier to get for a start-up business, especially if an applicant’s credit score is lower than the bank requires for business credit. Personal loan can be a unsecure loan, a secured loan or equity line in a home.

Advantages of Personal Loan
1. Easier to get for a startup business
2. Important option if the credit score is lower than required for business credit
3. May already have working relationship with a funder or equity in a home
4. Borrowed money can be used for whatever you need and buying products or services
5. Have a structured flexible payback period
6. Way to establish credit or improve credit score for a future business funder

Disadvantages of Personal Loan
1. Debt that a business has to repay – creates more overhead in your business
2. Applicant needs to have good credit and may require running a credit report
3. Late-payment or delinquency penalties can be very expensive
4. Access to personal credit is more limited with lower credit score or at a higher fee
5. An outside lender is now involved in your company – choose wisely
6. Can take time to secure, application process

Note: If borrowing money against the equity in your home, can put your home at risk.

 

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Action Step: If you cannot get the money you need from other business capital sources, a personal loan may make sense. Look for the best and lowest terms for personal credit. Start with the bank you do business with first and compare to 1 or 2 other banks in the area.

 

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   Additional Resources

More Ways to Access Capital      Return to Brand Library      Return to Brand Yourself

 

 

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