Personal Loans for Business

Personal loans are often used for personal expenses, such as home renovations and debt consolidation. But in many cases, you can also put them toward business costs. Borrowing a personal loan for business can have a number of advantages, including fast funding and a streamlined application process. 

It’s worth comparing all your financing options, such as business term loans and Small Business Administration (SBA) loans, to determine the best type of loan for you. Here’s a closer look at the best personal loans for business, along with tips for applying. 

4 best personal loans for business 

Lender	Individual lender or marketplace?	Rates (APR)
Credible	Marketplace	7.49% – 35.99%
LendingTree	Marketplace	5.99% – 35.99%
SoFi	Lender	8.99% – 29.49%
Upgrade	Lender	8.49% – 35.99%

The best personal loans for businesses offer competitive rates, flexible repayment terms, and a loan amount that fits your needs. You can find personal loans from institutions such as banks, credit unions, and online lenders. 

Before choosing a lender, it’s worth shopping around for a loan with the lowest rate and few—or ideally no—fees. You might also consider how long the lender takes to fund the loan and how many years you’ll have to pay it back. 

Unlike a business loan, which considers your business’s financial health, personal loan approval is based on your personal credit score, income, and debt-to-income ratio. You won’t need to provide business documentation when you apply, and the lender won’t consider your business credit score. 

Your personal credit score may need to be fair (FICO 580+) or good (FICO 670+) to qualify for a personal loan. Requirements vary by lender, but the stronger your score, the more likely you’ll qualify for a competitive interest rate. With that in mind, read on for the marketplaces and lenders we recommend for personal loans for businesses. 

Credible – Best marketplace

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LendEDU rating: 5.0 out of 5

• Expansive network of lenders
• User-friendly platform
• Strong privacy and security measures

Credible offers a vast array of lending options, making it a valuable resource if you’re exploring personal loans for business purposes. Its straightforward platform facilitates easy comparison of loan terms, rates, and conditions tailored to meet diverse business needs. 

With rigorous privacy and security protocols in place, business owners can navigate the loan selection process, ensuring their personal and business information remains secure. This makes Credible an ideal starting point for entrepreneurs of all credit backgrounds seeking flexible financing solutions.

LendingTree

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LendEDU rating: 4.8 out of 5

• Tailored loan quotes
• No impact on credit score for rate checks
• Complimentary credit score monitoring

LendingTree stands out for its personalized loan options, which benefit business owners with competitive rates that suit their specific financial scenarios. 

Its feature of checking rates without affecting credit scores is advantageous for businesses in the planning stages, allowing for informed decision-making without any risk to credit health. LendingTree’s free credit score monitoring is a bonus, helping business owners stay on top of their financial status while they focus on growing their enterprises.

SoFi – Best for good credit

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LendEDU rating: 5.0 out of 5

• Competitive interest rates
• Travel benefits for members
• No hidden fees

SoFi is an excellent choice for business owners with FICO credit scores of 670 and up, offering low-interest personal loans you can leverage for business investments.

With no required fees, SoFi ensures a transparent and cost-effective borrowing experience, enabling business owners to maximize their funding without worrying about unexpected costs.

Upgrade – Best for fair credit

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LendEDU rating: 4.9 out of 5

• Tools to monitor and improve credit health
• Payment date flexibility
• Cosigner option

Upgrade caters to business owners with FICO credit scores between 580 and 669, providing accessible loan options that consider the unique challenges smaller enterprises or those in the early stages of development might face. The availability of a cosigner option broadens accessibility, making it easier for businesses to qualify for the funding they need. 

Payment flexibility and valuable credit health tools support business owners in managing their finances, making Upgrade a practical choice for those looking to balance business growth with financial stability.

Should you take out a personal loan for your business?

You might be considering a personal loan in one of the following situations:

• To start a business
• To operate a business

Here’s what we recommend in each situation.

Should you take out a personal loan to start a business? 

Taking out a personal loan to start a business can provide the financing you need to get your startup off the ground. You can often borrow up to $100,000 with rates that might range from around 7% to 36%. 

Starting your business with personal loan funds may be the right fit for you if:   

• You can meet requirements: To qualify for a personal loan, you’ll need to meet a lender’s criteria for personal credit score, income, and debt-to-income ratio. By contrast, most business lenders require that you’ve been in business for a year or longer, make a minimum annual revenue, and in some cases, have a certain business credit score. Qualifying for a business loan may not be possible if you haven’t started your business yet. 
• You want flexible guidelines around loan use: Because you can use personal loans for almost anything, you can put the funds toward various expenses that go into starting a business, such as applying for licenses, purchasing equipment, or renting office space. Some business loans have more restrictions—for example, an equipment loan has to go toward buying equipment. 
• You need fast funds: Some lenders offer same-day or next-day funding, so you can access your loan funds in a short amount of time. 
• You don’t want to pledge collateral: Most personal loans are unsecured, so you don’t need to put up collateral to borrow. 
• The repayment terms work for you: You can often choose terms of one, three, five, or seven years, but your options may vary by lender. 

Borrowing a personal loan to launch a business might not be the right move if you’re not confident about your ability to repay the loan. Starting a business is risky, so consider how you’ll pay back the debt if your business fails and you need to draw on your personal funds. 

Our expert’s advice

Erin Kinkade

CFP®

I suggest having a business plan in place and consulting with a small business advisor to assist with preparing this, which should include budgeting and projecting the amount needed and repayment plans.

When should you use a personal loan to operate your small business? 

If you’re already running your small business and need financing to cover operational costs, a personal loan could make sense. You could use a personal loan to cover a gap in cash flow, cover payroll expenses, buy inventory or equipment, or use it for another purpose. 

A personal loan might be your best option if: 

• You want a streamlined application process: Applying for a personal loan can be a straightforward process. You won’t need to provide your business plan, licenses, or other business documentation as you would with a business loan. You can often complete a personal loan application with basic details and a few personal documents to verify your income and identity. 
• You don’t need a large loan amount: If you need $100,000 or less to operate your small business, a personal loan could make sense. If you need a large loan, consider a business loan or SBA loan, which can offer millions of dollars in funding. 
• You’re not looking for lengthy repayment terms: Along similar lines, a personal loan could be worth exploring if you’re comfortable paying it back within seven years or fewer. For longer terms, consider a business loan—an SBA 7(a) loan, for example, can span up to 25 years. 
• You’ve compared all your options: It’s important to research all your financing options before taking out a personal loan. A business loan, for instance, might have a lower interest rate. 

A personal loan might not make sense if you need to borrow more than $100,000, want repayment terms longer than seven years, or could qualify for a more affordable business loan or line of credit.

How to apply for a personal loan for a business

If you’re looking to apply for a personal loan for a business, here are the steps you’ll take in most cases: 

1. Review your credit: Your credit score affects your chances of loan approval as well as your rates, terms, and loan amount. You can check your score with a free credit monitoring service. Your credit card company or bank might also offer this ability. If your score is low, consider improving it before you pursue a loan or apply with a cosigner. 
2. Shop around with lenders: Compare options from multiple lenders so you can find the loan with the lowest costs of borrowing. Many lenders let you prequalify online. With prequalification, you can check your personal loan rates without hurting your credit score.
3. Compare your options: Look for a loan with a low interest rate, and keep an eye out for fees that could add to your costs. Consider your options for repayment terms, and be sure you can afford monthly loan payments. Using a personal loan calculator can help clarify your overall costs. 
4. Submit a loan application: Once you’ve selected a loan offer, you’ll fill out your loan application. You’ll provide your personal and financial information and specify what you’ll use the personal loan for. Plus, you’ll provide verifying documentation, such as your ID and pay stubs. 
5. Close on your loan: The lender will review your application and run a hard credit inquiry to check your credit. If your loan is approved, you’ll sign your final loan agreement and receive your funds. You can put the loan toward your business expenses and pay it back on your agreed-upon terms. 

Alternatives to personal loans for businesses 

As you’re exploring options for financing your business, personal loans offer advantages but also have certain limitations. You might consider the following options in addition to a personal loan.

Small business loans

You can use a personal loan for almost any legal purpose, but small business loans are designed to assist businesses. The primary difference is that small business loans often require proof of business profitability, which isn’t required for a personal loan. 

The advantage is that these loans often come with lower interest rates than personal loans. However, the application process can be more rigorous and extend the borrowing timeline.

Business line of credit

A business line of credit functions differently from a personal loan, offering flexibility that a personal loan can’t match. With a line of credit, you have access to a certain amount and pay interest only on the amount you use. 

This can be more cost-effective than a personal loan if you’re unsure of the exact amount you need at the start. However, as with small business loans, a line of credit often requires a solid business credit history, which might pose a challenge for newer businesses.

Business credit card

A business credit card is another alternative to a personal loan. Business credit cards can offer rewards.

The drawbacks include high interest rates if you don’t pay your balance in full each month and the possibility of damaging both business and personal credit scores if managed poorly.

Crowdfunding

Crowdfunding is a nontraditional financial product that can be an appealing alternative to personal loans. It allows you to raise funds from numerous individuals, typically through the internet. 

This method can provide significant funding without incurring debt, but it means sharing your business plan publicly, and it offers no guaranteed return. Not everyone who requests crowdfunding receives it, and it can be time-consuming to create an effective campaign.

Recap: Best personal loans for business

Lender	Rates (APR)
Credible	7.49% – 35.99%
LendingTree	5.99% – 35.99%
SoFi	8.99% – 29.49%
Upgrade	8.49% – 35.99%