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.
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.
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.
Additional Resources
More Ways to Access Capital Return to Brand Library Return to Brand Yourself
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