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Get FundedSmall business loans are one borrowing option, but they may be harder to qualify for if you have a newer business. An unsecured personal loan can offer an alternative path to funding. Banks, credit unions, and online lenders can offer personal loans for a variety of purposes, including small business needs.
Finding the right personal loan for your small business matters because you need to be able to borrow enough to meet your needs at terms you can afford to repay.
Compare Best Personal Business Loans
What we researchedHow We Picked
We reviewed dozens of lenders and personal loans to find the best one for a variety of needs, including bad or fair credit, flexibility, debt consolidation, short or no credit history, cosigned loans, and more.
Our methodology
AmONE conducted an audit of over 30 loan companies to find which ones offer personal loans.
Once we narrowed down the options, we analyzed the personal loans offered by 20 lenders and looked at over 10 data points, including credit score requirements, fees, accessibility, customer experience, APR rates, loan amounts, length of time to pay, the application process, and more. We picked the best personal loans by scoring loans based on those features.
AmONE will continue to spot-check and ensure the most recent loan information is included here as needed and update our list annually.
Top Lenders
Small business personal loans can be designed to meet different needs, depending on your credit scores, how much you need to borrow, and how long you’ll need to repay what you borrow. With that in mind, here are some of the top lenders to consider for personal loans.
Avant: Best for Fair Credit
Loan amount: $2,000 to $35,000
Loan terms: 24 to 60 months
Availability and restrictions: Loans are available in all 50 states and the District of Columbia
Avant pros & cons for business loans
Pros
- Personal loans of up to $35,000 can be used for virtually any purpose, including small business
- Interest rates and monthly payments are fixed, offering predictability
- You can check your eligibility for a loan without affecting your credit score
Cons
Upstart: Best for No Credit
Loan amount: $1,000 to $50,000
Loan terms: 3-year or 5-year repayment
Availability and restrictions: Upstart personal loans are not offered in Iowa or West Virginia.
Upstart pros & cons for business loans
Pros
- Offers interest rates that are often lower than traditional lenders
- Check your rates without affecting your credit score
- Designed for people with fair, poor, or limited credit history
- No prepayment penalties
- 99% of loans are funded within one business day of signing off on the final paperwork
Cons
Best Egg: Best for Longer Payoff Periods
Loan amount: $2,000 to $50,000
Loan terms: 3-year or 5-year terms
Availability and restrictions: Best Egg personal loans are not offered in Iowa, Vermont, West Virginia, or the District of Columbia.
Best Egg pros & cons for business loans
Pros
- Repayment terms of 3-5 years
- Maximum loan amounts of $50,000
- Rates and monthly payments are fixed
Cons
Upgrade: Best for Large Loans
Loan amount: $1,000 to $50,000
Loan terms: 24 to 84 months
Availability and restrictions: Upgrade loans are not offered in Iowa, West Virginia, or the District of Columbia.
Upgrade pros & cons for business loans
Pros
- Loans up to $50,000 for a number of purposes, including small business financing
- Autopay interest rate discount to help reduce the overall cost of the loan
Cons
Prosper: Easy, Streamlined Application
Loan amount: Up to $40,000
Loan terms: 3-year or 5-year terms
Availability and restrictions: Available in all 50 states and the District of Columbia
Prosper pros & cons for business loans
Pros
- A standout among personal loans for its easy application process
- Complete an application online in minutes
- Receive loan funding as quickly as one business day if approved
- Check your rates without affecting your credit scores
Cons
- Origination fee is charged
- Repayment terms are limited
- Maximum interest rate is high
How Does a Small Business Personal Loan Work?
Banks, credit unions, and other lenders offer personal loans to meet various financial needs. A small business personal loan is simply a personal loan used for small business purposes.
Like other personal loans, the lender gives you a lump sum of money that you can use as needed. For example, you might use a personal loan to pay for advertising and marketing materials for your business, cover your employees’ payroll or buy the necessary equipment to get your business up and running.
You’d then pay that money back to the lender over time with interest. The interest rates you pay for a small business personal loan and the amount you’re able to borrow can depend largely on your personal credit scores as well as your income.
Small Business Loan vs. Personal Loan for Business: What’s the Difference?
Small business loans are loans specifically designed for small business purposes. There are different types of small business loans. For example, there are SBA loans, which are guaranteed by the Small Business Administration, merchant cash advance loans, and small business equipment loans.
Personal loans, on the other hand, can be used to fund business expenses and for other goals, such as debt consolidation or home renovations.
A personal loan for business is typically unsecured, meaning no collateral is required. Business loans, on the other hand, usually require collateral and/or a personal guarantee of some kind.
There can also be differences in the loan amounts, interest rates, fees, and approval requirements for small business loans vs. personal loans for businesses.
For example, when applying for a business loan, you might be able to borrow $100,000 or more, but approval may hinge on how many years you have in business and your annual revenues. Personal loans, on the other hand, tend to have lower loan limits and rely more on personal credit scores and income for approval.
How to Compare Loans
Personal loans for small businesses can share some things in common, in terms of loan limits or interest rate ranges. But it’s important to take a closer look at individual loan options before applying. Here are some of the key things to consider when looking for a small business personal loan.
APR
APR, or annual percentage rate, reflects the annualized interest cost for a personal loan. The higher the APR, the more you’ll pay in interest over the life of the loan.
When comparing personal loan APRs, it’s important to consider three things:
- APR range
- Fixed vs. variable rates
- Interest rate discounts
The APR range reflects the high and low end of what you might pay for a loan, but getting the lowest rate isn’t guaranteed. Your rate can depend on credit scores and other financial factors. Getting a rate quote can give you an idea of what APR you might qualify for.
Next, consider whether the rate is fixed or variable. A fixed-rate personal loan has an APR that stays constant for the life of the loan. This means your payments will always be the same.
Variable-rate loans, on the other hand, have an APR that can move up or down over time. This could mean interest savings if rates stay low, but a rate increase could make your loan more expensive.
Some lenders offer an interest rate discount when you enroll in autopay. This is usually in the 0.25% to 0.50% range, which doesn’t seem like much, but it can add up to big savings over time.
Origination fees
A loan origination fee is a fee that lenders charge to cover the cost of creating and underwriting the loan. This can be a flat fee or a percentage of the loan amount.
Considering origination fees for small business personal loans is important for two reasons:
- Determining the total cost
- Estimating how much of the loan proceeds you’ll receive
In most situations, an origination fee is paid upfront and deducted from the loan proceeds. So, if you’re taking out a $50,000 personal loan for a business with a 5% origination fee, you’ll only get $47,500 in funding. The other $2,500 goes straight to the lender, but you still have to pay interest on the full $50,000.
Special features
When comparing personal loan lenders, it’s helpful to consider whether they offer any special features or benefits. Look at whether personal loans can be used for business purposes. If not, you can rule that lender out and move on to the next one on the list.
If they do allow personal loans for small businesses, consider what other benefits might be available. For example, can you get an autopay discount? Do you have the option to choose your payment due date? Can you defer payments temporarily if you’re having trouble making them?
Repayment period and terms
Choosing the right repayment period matters because it can influence the total amount you pay for the loan. The longer your repayment term and the higher the APR, the more expensive the loan becomes. However, a longer term can also mean a lower monthly payment.
If you have a newer business that isn’t generating significant cash flow yet, a longer loan term could make sense from a monthly payment perspective. On the other hand, if you’re already making some profit from the business, you may choose a shorter term if that means interest savings.
Funding time
Consider how quickly you’ll be able to get your loan funded once you’ve been approved.
A number of lenders offer loan funding in as little as two to three business days, with some even offering same-day funding.
How to Get a Personal Loan for Business
Having a step-by-step checklist to follow can make it easier to find the right loan for your needs. Here’s what you can expect as you begin looking for small business personal loans.
Learn about and compare business financing solutions
The first step in finding a personal loan for business is getting familiar with your financing options. Weighing a small business loan vs. business credit card vs. personal loan for business, for example, can make it easier to narrow down which type of loan or line of credit may work best.
Research companies
Numerous lenders offer personal loans, and it’s important to know how to spot a good one. Find a company that offers the kind of personal loan products you’re looking for, charges competitive rates, and has a good reputation. Looking at five to ten companies can give you a sense of how different lenders measure up.
Find your best loan
The best loan for your small business is the one that you can qualify for at the most favorable terms.
When comparing loans, it’s helpful to understand exactly what you need. For example, are you looking for a smaller or larger loan? Do you want a shorter or longer repayment term? What interest rate are you hoping to get?
Gather information and apply for a loan
Applying for a personal loan online can be convenient and quick if you gather your documentation first.
Some of the documents you might need to apply for a personal loan include a government-issued ID, bank statements, pay stubs, and tax returns. The more information you have already prepared, the more you may be able to speed up the application and approval process.
Get approved
The easiest personal loan for a small business to get is the one that you can qualify for based on how well you align with the lender’s approval requirements. Checking your credit scores before you apply and getting rate quotes from different lenders (that don’t require a hard credit check) can help you determine which loans you have the best chance of being approved for.
How AmONE Can Help You Fund Your Business
Finding the right personal loan shouldn’t be stressful, but if you’re having trouble deciding on a borrowing option, AmONE can help.
AmONE does the research to help you find your best personal loan. We match you with the best business loan, and you can decide whether to explore the qualified options we provide or reach out to a loan specialist for additional assistance.
This is a free service, so if you’re struggling to find the right small business personal loan, get in touch with us today to see how we can help.
Personal Loans for Small Business Pros and Cons
As you weigh personal loans for a small business in the balance, keep these pros and cons in mind.
Pros
- It may be easier to get approved for a personal loan versus a traditional small business loan
- Fixed interest rates can make it easier to budget for loan repayment
- Personal loans are typically unsecured, meaning you don’t need to provide collateral
- A higher credit score can help you qualify for the lowest personal loan rates
- Personal loans can be used to cover a range of different business expenses
Cons
- Getting the lowest rates for a personal loan may be difficult if you have fair or poor credit
- Some personal loans require origination fees, prepayment penalties, and other fees
- Defaulting on a personal loan can harm your credit score and lead to collection actions
Frequently Asked Questions
A business loan can help you build business credit and you may be able to borrow more money compared to a personal loan. However, a personal loan may be easier to get approved for if you have a newer business.
If the lender allows it, then yes, you can use a personal loan to pay for business expenses.
You can get personal loans for business by researching lenders to find ones that offer these loans, then applying for loans you’re most likely to qualify for. Approval can be based on overall creditworthiness.
Personal loans for small businesses can be offered at traditional banks and credit unions, online banks, and online lenders. Loan amounts, APRs, and terms can vary widely.
It’s possible to get a personal loan or a business loan with bad credit. However, you may pay a higher interest rate or origination fee for the loan.
Whether it makes sense to get a personal loan for your business is a personal decision. Before applying for a loan, it’s important to consider all the financing options you might qualify for.
Personal loans are typically unsecured, meaning no collateral is needed. Secured personal loans do require some type of collateral or guarantee.
