Today online loan apps have made it easy and convenient for everyone to get an advance loan for various purposes. Anyone can apply for a loan whenever they need funds to fulfill their financial needs. Business owners can get business loans if they need money to fund their businesses. And individuals can get a personal loan to pay academic fees, bills, wedding expenses, etc. You only have to install an online loan app on your mobile phone to get instant funds anytime.
Today everyone is aware of the salary loan apps and the different types of loans they offer. Every online loan app majorly provides two types of loans, i.e., business and personal loans. But many people do not know how business loans are different from personal loans. If you are also one of those, who do not know the difference between personal and business loans, then continue reading. You will surely know everything by the end of this article.
What is a personal loan? A personal loan is a type of loan that an individual can apply for online without pledging any collateral or security. You can get a personal loan online with no paperwork and minimum documentation. You can apply for a personal loan for various purposes, such as a travel loan for paying travel expenses.
What is a business loan? A business loan is a type of loan that is offered by banks or loan apps, especially for business purposes. If you want to start a new business or already have your own business, you can apply loan online for various reasons, which are as follows:
- For investing in a startup
- For expansion and growth of existing business
- For buying machinery or equipment
- For making payments of previous loans or bills
- For managing cash flow
- To cover the losses due to uncertain risks, etc.
If you need funds for business purposes, you can apply for a business loan online using an instant money loan app.
So, now you have surely understood what is a personal and a business loan? Now you need to understand the significant differences between business and personal loans, which are as follows:
Eligibility criteria & requirements –
Both personal loans have different eligibility criteria and requirements. For a personal loan, you need to provide details regarding your details so that lenders can check your debt to income ratio. Also, you need to submit some of your documents for identity verification.
But when you apply for a business loan, you also need to provide your business details along with your personal details.
Collateral security –
You do not need to pledge your assets as collateral to get a personal loan. But collateral is required for getting business loans.
Tax benefits –
You do not get any tax benefits while getting a personal loan. But the monthly interest you pay for your business loan is tax deductible.
Loan apps offer personal loans for the short term, maximum of up to five years. But business loans are offered for short and long-term, from one year to fifteen years.