A business loan provides funds to businesses to maintain all the expenses of the organization. It is provided by various banks, financial institutions, or NBFCs. Small business loans can be secured or unsecured loans, based on the loan amount, the relationship between borrowers and lenders, and the type of loan.
| High loan amount | The borrower can take a high loan amount of up to Rs. 1 crore. The amount of loan can be provided based on your business requirements |
| Hassle-free application process | It requires an easy applicational process and less documentation. |
| Repayment loan tenure | The flexible repayment tenure for a business loan is up to 7 years. |
| No collateral required | A Business loan is a collateral-free loan. Therefore, there is less chance of losing their assets if they default while repaying their loans. |
| Easily accessible | Many lenders provide small business loans to their borrowers, it is easy for the corporation to help the need of their business. |
| Quick disbursal | The business person can avail of the business loan by both methods i.e., online and offline. Both methods help you with the quick disbursal |
Eligibility criteria depend on various factors such as the age of the borrower, business turnover, repayment history, creditworthiness, etc.
| Advantages | disadvantages |
| An applicant can state tax benefits for paying EMIs of a business loan. | The shortfall of flexibility with repayment tenure. |
| It can be paid back over a higher repayment tenure. | The borrower requires a strong credit profile. |
| You can secure a high amount with a business loan. | It requires extensive documentation during the loan application. |
| The borrower with a good CIBIL Score can get a relatively low rate of interest. | The borrower might lose assets if you default on the payment of the loan. |
Also read: - Facts About Business Loans and Their Benefits
A personal loan is an unsecured loan. It is offered to the borrower for personal expenses such as unplanned medical expenses, spending on a wedding, necessary home renovation, paying off bills, purchase of gadgets, funding a holiday, finance in education, etc.
| Less paperwork | It requires less documentation as the process for applying for a loan is online. |
| Flexible repayment | Lenders provide the option of flexible repayment that ranges up to 60 months. You can choose the tenure period as per your requirements. |
| For various purposes | It can be offered for several purposes like weddings, higher education, emergency medical expenses, etc. |
| Quick disbursal | After the approval of the loan, the loan should be disbursed in your account within 4 to 5 days. |
| High loan amount | You can get a maximum loan amount of up to Rs. 25 lakhs depending on various factors such as work experience, age criteria, repayment capacity, financial profile, etc. |
Eligibility criteria depend on many factors like monthly salary, total work experience, age of an applicant, business income, credit score, etc.
For self-employed individuals: -
For salaried individuals: -
| Advantages | Disadvantages |
| It does not require any security or collateral as it is an unsecured loan. | The rate of interest for a personal loan is generally high as it is an unsecured loan. |
| There is a speedy disbursed of a loan amount. | The borrower can secure less loan amount as compared to a small business loan. |
| Personal loans require less documentation. | You should not claim tax benefits on the payment of EMI for a personal loan. |
| It can be used for multiple purposes. | It requires to be paid over a short duration. |
Also read: - Compare Lowest Interest Rate for Personal Loan by All Banks
Therefore, knowing the facts financeseva allows you to choose the best deals for business loans and personal loans.
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