The short answer is yes, a personal loan can also be used to cover the expenses associated with starting a small business. In reality, this is true for all startups, whether they are financed with a loan or are self-financing. Starting slow and spending only what you need will make financial sense until your business gains momentum. You could run the business from home for about a year instead of renting office space, for example.
Opting for used equipment and using free fonts to market your brand or product are other ways to keep costs low. Best for SBA loans for startups. As an alternative, startup owners might consider borrowing money from friends or family to get their business up and running. In addition, depending on the lender, you may be charged a fee if you cancel the loan early, before the end of the repayment period.
If you're interested in obtaining a loan to start a business, you can start by understanding what this process entails. As the name suggests, a personal loan is personal, meaning it can be used to cover the cost of anything that's important to your personal circumstances. Select spoke with financial expert Ashley Russo to determine when it may (and may not) be beneficial to apply for a personal loan to start your small business. It's possible to get an initial loan with bad credit, but it's more difficult than for better-qualified applicants.
The Census Bureau found that 64% of entrepreneurs use their personal savings and their family's money to start a business, while 16.5% apply for a business loan. Startup loans can help cover the costs of starting a new company or turning it into a larger operation. Despite the prevalence of small business loans, most entrepreneurs and startups finance their businesses with their own money. Actually, there's no hard and fast rule about what the loan should be used for (although you'll usually have to explain your plan for using the money when you apply for the loan). Startup founders who can't qualify for a business loan may have better luck applying for a personal loan.
Depending on your personal and business qualifications, you may be eligible for an initial loan through several lenders. Prospective borrowers can reinforce their loan requests by drawing up a comprehensive business plan that specifies how the company plans to make money and outlines the company's marketing strategy. The SBA does not provide loans on its own, but it does guarantee small business loans granted through banks and credit unions.