What are the advantages of a business loan over a personal loan?
Most people assume a business loan is only for new businesses that are trying to get off the ground.
In reality, business loans are an important way for many well-established businesses to manage cash flow and expand their operations.
There are also a number of other reasons to consider a business loan.
Borrow larger sums
Many small businesses get off the ground with the help of something like a personal loan. However, larger businesses may need to access more funds than what a typical personal loan would allow.
Although you can potentially borrow more funds, many business loans will require a business plan, and detailed financials that outline how the funds will be used within the business.
Flexibility
Typically, business loans offer more flexibility than a personal loan.
Flexible terms mean that you’re able to pay back a business loan at times that are more suited to the way your business operates and its cash flow situation.
Using a business loan also has an advantage compared to other forms of capital raising – such as taking on investors – as it allows a business owner to retain full control.
More appealing interest rates
Generally speaking, if a loan is secured it will attract a lower interest rate than a comparable unsecured loan.
For the most part, personal loans are unsecured, meaning they are not backed by anything and attract higher rates of interest.
Personal protection
If you take out a business loan through something like a company structure, in the event the business fails, you could potentially be shielded. However, a personal guarantee may be required.
While this is not the outcome a business owner is hoping for, it’s always worth seeking professional advice on how to best structure your business before looking at your loan options.
If you have a question or would like more information, please contact…
Steve
Mobile 0423 894 864
steve@bettermoneylenders.com.au
Brett
Mobile 0428 156 680
brett@bettermoneylenders.com.au
