As a business owner, you likely know that the rule is to keep your personal and business finances separate, but what happens when you get an offer for a personal business loan? If you are struggling to get business loans or other financing, you may see this as a viable option.
NerdWallet explains that a personal business loan rests entirely on your shoulders because it is a loan you take out and not one that your business takes out. A personal business loan is simply a personal loan you use for business expenses, so you will not get any of the perks of a regular business loan and there are a few other disadvantages, but this type of loan does offer some perks.
Taking out a personal loan for business needs is a quick solution. You will often find it requires far less paperwork and time investment than a typical business loan.
You may also be able to snag a lower interest rate than with a business loan, especially if you have excellent credit. A personal loan also allows you to dictate how you use the money. If you need to handle personal expenses in addition to business expenses, you can do that.
You will typically not be able to get as much money with a personal loan as you do with a business loan. In addition, you will need to be careful about tracking the spending of the money for tax purposes.
Perhaps most importantly, you take on the risk yourself. If you miss a payment or run into trouble, you could lose your personal assets and damage your own credit.