Is it Correct to Use a Personal Loan for a Business?
If you are looking to finance a business regardless of its size, we recommend that you do it the right way. Well, according to our report on SME credit, 80% of business owners use personal loans to cover the expenses they generate day after day. Something that is not recommended, because the offer you can get for a special credit for companies could be greater and more beneficial both for your financial health and for what you want to make thanks to the loan.
Below we will tell you what is the best way to finance a business, what you should compare in all offers and how to change those personal debts that your SME has generated.
How to finance a business correctly?
The correct way to finance a business is by requesting those loans or credits that have been specifically designed to cover the expenses that companies face today. The offer made by financial institutions is based on amounts and terms that are adapted to the needs and movements they present. While personal loans are designed to acquire goods at a lower cost than a business requires.
In addition to that the interests are high due to the term that they handle, because you could be paying up to 50% or 70% more than with what you could pay in a financing for SMEs. Without forgetting that you are putting your score at risk in credit bureau. Limiting your chances of obtaining new and better credits for both you and your business.
What to compare to choose the best?
There are three main factors that must be compared when applying for a loan. The first is the amount, since you must choose the amount that is sufficient for what you need and that you can pay. You can decide for an amount according to your ability to pay, which is what will allow you to know what margin of everything you handle can be used to pay a credit.
Next, compare the interests they handle and the term. This according to the one that generates a lower interest from the commission to the CAT. (That is the percentage to estimate the real price for the credit) As for the term, which is consistent with the time you require to liquidate it, helping you with the flow of money you manage.
How to change your personal debt?
If until now you have financed your business with personal loans, there is a possibility that you can change all those multiple debts for the correct financing. For example, Koncentra, allows you to refinance your business under the standards it requires. Also, your debt becomes one and you take part of that financing to pay the outstanding debts you have. What ultimately gives you the ease of saving interest and also take that money in the investment to improve your business and make it grow.
Now that you know the right perspective on financing a business with personal loans. You have the opportunity to make better decisions for your business and your finances. Do not forget to compare all available offers and choose the one that is most useful and suitable for your projects.