Personal Loans for Business: Compare Rates from Top Lenders
Getting a personal loan for business use can be risky, but they are usually easier to qualify for than business loans.
| Lender | User rating | Best for | APR | Term | Amount | Min. credit score | |
|---|---|---|---|---|---|---|---|
|
Exceptional customer service | 7.99% – 24.99% | 36 to 84 months |
$2.5k – $40k |
202 |
| Lender |
|
|---|---|
| User rating | |
| Best for | Exceptional customer service |
| APR | |
| Term | 36 to 84 months |
| Amount | $2.5k – $40k |
| Min. credit score | 202 |
Personal loans for business at a glance
Best For exceptional customer service
- Repayment assistance programs available in case of financial hardship
- Rated 4.9/5.0 stars by LendingTree users
- Maximum APR caps at 24.99%
- Requires good credit and a moderate income
- Can only borrow up to $40,000, which might not provide the business funding you need
No one takes out a personal loan with the intention of falling behind, but life happens. Discover has three repayment options that can help get you back on track. You could defer (or put off) some of your payments, temporarily reduce them or extend your loan term.
Keep in mind, though, that the longer you take to pay off your loan, the more overall interest you’ll probably pay. Use a personal loan calculator to see how these loan modifications might impact your bottom line.
Read our full Discover personal loan review.
You must meet the following requirements to qualify for a loan with Discover:
- Age: Be at least 18 years old
- Citizenship status: Have a valid Social Security number
- Income: Make at least $40,000 per year
- Administrative: Have a valid address and working email address and be able to complete the application online
- Credit score: 720+
What is a personal loan for business?
A personal loan for business is simply a personal loan that’s used to fund business expenses. Personal loans come as a lump sum of cash, which you will pay back in equal monthly installments.
Personal loans tend to be easier to qualify for than traditional small business loans. Your ability to get a personal loan only depends on your own credit factors, like your FICO score and your debt-to-income (DTI) ratio. Your DTI ratio measures how much debt you have compared to how much money you make.
When you apply for a business loan, the lender will also review your business’s financial health as well as yours. It will consider things like how long you’ve been in business, your revenue and your business credit score.
Still, getting a personal loan for business has downsides. One of the biggest is liability. If you don’t pay back your personal loan, your credit score will tank. With a traditional business loan, liability may only fall on the business itself, shielding your personal credit score.
Personal loans vs. business loans
Lenders set their own eligibility requirements, loan amounts and loan terms. Even so, the information below is a good launching point when comparing your loan options.
| Business loan | Personal loan for business | |
|---|---|---|
| What is it? | Loans that are specifically designed for business expenses. Examples here are small business administration (SBA loans) and equipment loans. | A personal loan that you use for business purposes. |
| Common eligibility requirements | A business credit score of at least 80 for the best rates A solid personal credit score $36,000 or more in annual revenue At least six months’ time in business A workable business plan and balance sheet Personal and business tax returns Articles of incorporation Collateral, in some cases | Might qualify with at least fair credit (580+), but need at least good credit (670+) for affordable rates DTI ratio below 36% Several years of positive payment history on your credit cards and other installment loans Regular source of income |
| Key takeaways | Can shield you from personal liability if you can’t repay Tend to have lower rates, and interest is usually tax deductible Offers larger loan amounts and in some cases, longer repayment terms Helps you build business credit Longer application process and tougher eligibility requirements | Interest may be tax deductible as long as you use the loan for business purposes You may qualify with bad credit, but prepare to pay an APR of 35.99% (or higher) Smaller loan sizes might not meet your needs Has no impact on your business credit Application process is generally quick, and some lenders can provide same-day funding |
When could getting a personal loan for your business make sense?
- You’re a new business owner or founding a startup. You might not qualify for a business loan if you’ve been operating for a short time and/or you don’t bring in a lot of revenue.
- You have good personal credit. Even though it’s generally easier to get approved for a personal loan than a business loan, you’ll still want good credit. Personal loans usually have lower APRs than credit cards, but only for people who have good to excellent credit.
- You know you can repay your loan. Defaulting on a personal loan will have a disastrous effect on your personal credit score.
When could a business loan be a better option?
-
You’re running a successful, longstanding business
Business loans usually have lower rates than personal loans, and they provide more money, too. They’re also harder to qualify for. You’ll have to provide a lot of documentation to prove your business is capable of paying back the loan. -
You want extra liability protection
Your personal credit score might not be affected if you can’t pay your business loan. -
You need a loan for a specific business purpose
Some types of business loans are better for meeting specific business-related needs. For instance, if you need to buy a forklift, business equipment financing might be a good fit.
How to get a personal loan for your business
Applying for a personal loan is straightforward. Here’s what you can expect:
Check your credit score
Get your free credit score with LendingTree Spring. Your credit score will help you figure out what lenders you could qualify for and whether your offers are competitive. If your score is on the lower end, consider working to improve your score before applying to get the best possible rate.
Get prequalified
Prequalification allows you to see estimated rates and terms without impacting your credit score. Try to get at least three offers. According to a LendingTree study, borrowers who compared at least three offers could save an average of $2,516 over the life of their loan.
Formally apply for the loan
After you’ve picked the best lender for you, the next step is to formally apply for the loan. In most cases, this will involve filling out an online application and uploading documents (more on that next).
Provide supporting documentation
Your lender is likely going to want to verify the information you provided on your application. Typically, it will perform a hard credit pull and ask you to provide documents like your W-2 and government-issued ID. Find these ahead of time so they’re ready to go when you apply.
Close on the loan
Once the lender approves your loan, read over the paperwork and sign on the dotted line. From there, the lender will send you your funds (usually by direct deposit).
How to compare personal loans for business
Once you’ve gotten a handful of loan offers, compare them so you can find the best deal.
APR: Your annual percentage rate tells you how much your loan will cost you, including interest and fees. The higher this percentage, the more expensive the loan.
Fees: The most common personal loan fees you’ll see are origination fees, late payment fees and returned payment fees. An origination fee is an upfront fee that the lender will deduct from your loan before sending you your money. Some lenders only charge these if you have rocky credit. Others apply them to every loan.
Loan term: Your loan term is how long it will take to repay your loan in full if you stick to your repayment schedule. With a short-term loan, you’ll likely pay less interest overall, but your monthly payment will probably be higher. Long-term loans usually offer more affordable monthly payments, but you’ll likely pay more interest over time.
Funding time: The funding timeline tells you how long it will take to receive your funds. Some lenders can offer quick loans with same-day funding, while others may require a few business days.
Lender perks: Some lenders may also offer perks, such as free credit monitoring, live chat or zero-fee loans. Outside of rates, think about what’s important to you and seek out lenders that can accommodate.
Frequently asked questions
Usually, but not all lenders offer personal loans for small businesses. If a lender lets you use a personal loan for business, you’ll have to take it out in your name, not your business’s. You can usually find a lender’s loan restrictions on its website.
Personal loan interest is usually a tax deduction if you use it toward business expenses. That said, it’s a good idea to verify your returns with a professional before filing.
Personal loans are often easier to qualify for than small business loans, which may be beneficial to some borrowers. Yet, they require the business owner to accept personal responsibility for paying back the loan. That means your personal credit score is on the line if you make late payments or default.
Our methodology
We reviewed more than 32 lenders to determine the overall best six personal loans for business. To make our list, lenders must offer personal loans for business with competitive APRs. From there, we prioritize lenders based on the following factors:
Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.