BEST OF

Personal Business Loans: What You Need to Know

A personal loan for business may be an option when other forms of business financing don't work. Learn where to find a personal loan and the pros and cons.

Jun 28, 2022

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Small-business owners have plenty of hurdles to clear, and one of the highest is finding startup financing. If your business is too new to qualify for a traditional business loan, an unsecured personal loan may make sense as long as you receive an affordable rate.

Personal Business Loans: What You Need to Know

Our pick for

Borrowers with fair credit

BestEgg
Get rate

on Best Egg's website

Best Egg

4.5

NerdWallet rating 
BestEgg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600
Get rate

on Best Egg's website


Min. credit score

600

Key facts

Best Egg personal loans are available to borrowers who want to consolidate debt and secure a loan, but they lack some features offered by other lenders.

Pros

  • Offers wide range of loan amounts.

  • Provides secured loan option for homeowners.

  • Offers direct payment to creditors with debt consolidation loans.

Cons

  • Origination fee.

  • No rate discounts.

  • No option to choose initial payment date.

Qualifications

  • Minimum credit score: 600; borrower average is 700.

  • Minimum credit history: 3 years and 3 accounts.

  • Minimum income requirement is $3,500; borrower average is $80,000. Borrower must have enough cash flow to cover current financial obligations.

  • Maximum debt-to-income ratio: 40% or 65% including a mortgage; borrower average is 40%.

  • Employment: Must provide proof of income; part-time employees are eligible.

  • Must provide valid U.S. address and Social Security number.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 0.99% - 8.99%.

  • Return fee: $15 if payments are not processed.

Disclaimer

*Trustpilot TrustScore as of June 2020. Best Egg personal loans, including the Best Egg Secured Loan, are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, a Nationally Chartered Bank, Member FDIC, Equal Housing Lender. “Best Egg” is a trademark of Marlette Holdings, Inc., a Delaware corporation. All uses of “Best Egg” refer to “the Best Egg personal loan”, “the Best Egg Secured Loan”, and/or “Best Egg on behalf of Cross River Bank or Blue Ridge Bank, as originator of the Best Egg personal loan,” as applicable. The term, amount, and APR of any loan we offer to you will depend on your credit score, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank’s policies. Loan amounts range from $2,000– $50,000. Residents of Massachusetts have a minimum loan amount of $6,500 ; New Mexico and Ohio, $5,000; and Georgia, $3,000. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $100,000. Annual Percentage Rates (APRs) range from 8.99%–35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99%–8.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. For example: a 5‐year $10,000 loan with 9.99% APR has 60 scheduled monthly payments of $201.81, and a 3‐year $5,000 loan with 7.99% APR has 36 scheduled monthly payments of $155.12. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. Best Egg products are not available if you live in Iowa, Vermont, West Virginia, the District of Columbia, or U.S. Territories.

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Upgrade
Get rate

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Est. APR

7.96-35.97%

Loan amount

$1,000-$50,000

Min. credit score

560
Get rate

on Upgrade's website


Min. credit score

560

Key facts

Customizable loan features and discount opportunities make Upgrade a strong option for fair- and bad-credit borrowers.

Pros

  • Secured and joint loans.

  • Multiple rate discounts.

  • Mobile app to manage loan payments.

  • Direct payment to creditors with debt consolidation loans.

  • Long repayment terms on home improvement loans.

Cons

  • Origination fee.

  • No option to choose your payment date.

Qualifications

  • Minimum credit score: 560.

  • Minimum number of accounts on credit history: 1 account.

  • Maximum debt-to-income ratio: 75%, including the loan you're applying for.

  • Minimum length of credit history: 2 years.

  • Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: 1.85% to 8.99%.

  • Late Fee: $10.

  • Failed payment fee: $10.

Disclaimer

Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 7.96%-35.97%. All personal loans have a 1.85% to 8.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.

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Our pick for

Borrowers with good to excellent credit

SoFi
Get rate

on SoFi's website

SoFi

5.0

NerdWallet rating 
SoFi

Est. APR

7.99-23.43%

Loan amount

$5,000-$100,000

Min. credit score

None
Get rate

on SoFi's website


Min. credit score

None

Key facts

Qualified borrowers will find few lenders better than SoFi, thanks to its zero fees and thoughtful perks like unemployment protection and free financial advising.

Pros

  • No fees.

  • Joint loan option.

  • Rate discount for autopay.

  • Hardship program for borrowers in need.

  • Mobile app to manage loan.

Cons

  • No option to choose initial payment date.

  • High minimum loan amount.

Qualifications

  • Must legally be an adult in your state.

  • Must be a U.S. citizen, permanent resident or visa holder.

  • Must be employed, have sufficient income or have an offer of employment to start within the next 90 days.

Available Term Lengths

2 to 7 years

Fees

  • Origination fee: None.

  • Late fee: None.

Disclaimer

Fixed rates from 7.99% APR to 23.43% APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 8/22/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

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Discover
Get rate

on Discover's website

Discover® Personal Loans

5.0

NerdWallet rating 
Discover

Est. APR

6.99-24.99%

Loan amount

$2,500-$35,000

Min. credit score

660
Get rate

on Discover's website


Min. credit score

660

Key facts

Discover personal loans can be a smart way for borrowers with excellent credit to consolidate or refinance debt.

Pros

  • No origination fee.

  • Option to pre-qualify with a soft credit check.

  • Fast funding.

  • Mobile app to manage loan.

Cons

  • May charge late fee.

  • No co-sign or joint loan option.

  • No rate discount.

Qualifications

  • Minimum credit score: 660.

  • Must be at least 18 years old.

  • Must be a U.S. citizen or permanent resident.

  • Must have a minimum household income of $25,000.

Available Term Lengths

3 to 7 years

Fees

  • Origination fee: None.

  • Late fee: $39.

Disclaimer

This is not a commitment to lend from Discover Personal Loans. Your approval for a loan is determined once you apply and is based on your application information and credit history. Your APR will be between 6.99%-24.99% based upon creditworthiness at time of application for loan terms of 36-84 months. For example, if you get approved for a $15,000 loan at 10.99% APR for a term of 72 months, you'll pay just $285 per month. Our lowest rates are available to consumers with the best credit. Many factors are used to determine your rate, such as your credit history, application information and the term you select. Not all applications will be approved.

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Laurel Road Personal Loan
See my rates

on NerdWallet's secure website

Laurel Road Personal Loan

5.0

NerdWallet rating 
Laurel Road Personal Loan

Est. APR

8.99-24.25%

Loan amount

$5,000-$45,000

Min. credit score

660
See my rates

on NerdWallet's secure website


Min. credit score

660

Key facts

Laurel Road’s personal loans are a strong fit for good-credit borrowers who qualify for a low rate or fair-credit borrowers who can add a co-signer.

Pros

  • Co-sign and joint loan options.

  • No origination fee.

  • Rate discount for autopay.

  • Direct payment to creditors with debt consolidation loans.

Cons

  • Late fee.

  • High minimum loan amount.

Qualifications

  • Minimum credit score: 660.

  • Must be a U.S. citizen or permanent resident.

Available Term Lengths

3 to 5 years

Fees

  • No origination.

  • Late fee: 5% of payment or $28 after 15 days.

  • Insufficient fund fee: $20.

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Our pick for

Borrowers with bad credit

Lending Club
Get rate

on LendingClub's website

LendingClub

5.0

NerdWallet rating 
Lending Club

Est. APR

8.30-36.00%

Loan amount

$1,000-$40,000

Min. credit score

600
Get rate

on LendingClub's website


Min. credit score

600

Key facts

LendingClub loans have limited term lengths, but you can add a co-borrower to help your chances of qualifying for a lower rate.

Pros

  • Joint loan option.

  • Direct payment to creditors with debt consolidation loans.

  • Option to pre-qualify with a soft credit check.

  • Option to change your payment date.

Cons

  • Origination fee.

  • Late fee.

  • No mobile app to manage loan.

Qualifications

  • Minimum credit score: 600.

  • Maximum DTI: 60%; 40% for joint applicants.

  • Minimum credit history: 37 months and 2 accounts.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 3% to 6%.

  • Late fee: 5% of payment or $15 after 15-day grace period.

Disclaimer

Between April 2022 and June 2022, Personal Loans issued by LendingClub Bank were funded within 44 hours after loan approval, on average. The time it takes for a loan to be funded is not guaranteed and individual results vary based on multiple factors, including but not limited to investor demand. A representative example of payment terms for a Personal Loan is as follows: a borrower receives a loan of $16,980 for a term of 36 months, with an interest rate of 13.49% and a 6.00% origination fee of $1,019, for an APR of 17.89%. In this example, the borrower will receive $15,961 and will make 36 monthly payments of $576. Loan amounts range from $1,000 to $40,000 and loan term lengths range from 24 months to 60 months. Some amounts, rates, and term lengths may be unavailable in certain states. For Personal Loans, APR ranges from 8.30% to 36.00% and origination fee ranges from 3.00% to 6.00% of the loan amount. APRs and origination fees are determined at the time of application. Lowest APR is available to borrowers with excellent credit. Advertised rates and fees are valid as of July 11, 2022 and are subject to change without notice. Loans are made by LendingClub Bank, N.A., Member FDIC, Equal Housing Lender (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. LendingClub Bank is not an affiliate of NerdWallet Compare, Inc. which is an unrelated third party (“third party”). LendingClub Bank is not responsible for any products and services provided by this third party and may receive compensation if you visit the third party’s websites or use any of its products or services. Credit eligibility is not guaranteed. Loans are subject to credit approval and may be subject to sufficient investor commitment before they can be funded or issued. Certain information that LendingClub Bank subsequently obtains as part of the application process (including but not limited to information in your consumer report, your income, the loan amount that your request, the purpose of your loan, and qualifying debt) will be considered and could affect your ability to obtain a loan. Loan closing is contingent on accepting all required agreements and disclosures at Lendingclub.com. “LendingClub” is a trademark of LendingClub Bank.

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Upstart
Get rate

on Upstart's website

Upstart

4.5

NerdWallet rating 
Upstart

Est. APR

5.42-35.99%

Loan amount

$1,000-$50,000

Min. credit score

None
Get rate

on Upstart's website


Min. credit score

None

Key facts

Though Upstart’s personal loans don’t come with dazzling features, they’re a fast-funding option for borrowers with low credit scores and strong earning potential.

Pros

  • Accepts borrowers new to credit.

  • Fast funding.

  • Option to change your payment date.

  • Option to pre-qualify with a soft credit check.

  • Offers free financial education

Cons

  • May charge origination fee.

  • No joint, co-signed or secured loans.

  • No mobile app to manage loan.

  • Only two repayment term options.

Qualifications

  • Minimum credit score: None.

  • Minimum annual income: $12,000; this lender accepts income from employment, alimony, retirement, child support, Social Security, rentals, trusts, pensions, disability and scholarships.

  • Must have a full-time job or be starting a full-time job in six months.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 0% - 10%

  • Late fee: 5% of past due amount or $15, whichever is greater.

  • Returned check fee: $15.

Disclaimer

Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($2,100), MA ($7,000), NM ($5,100), OH ($6,000). The full range of available rates varies by state. The average 5-year loan offered across all lenders using the Upstart platform will have an APR of 25.05% and 60 monthly payments of $25.80 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $15,478 including a $804 origination fee. APR is calculated based on 5-year rates offered in June 2022. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved. This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the Upstart.com website.

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Can you get a personal loan for your business?

A personal loan is money borrowed from a bank, credit union or online lender that can be used for any number of purposes, including to fund a business.

Most personal loans are unsecured, which means they don’t require collateral, and you pay them back in fixed monthly payments — typically over one to seven years.

Benefits of using a personal loan to start a business

Flexibility: As long as your lender has no restrictions against using a personal loan for your business, you can use the money however you want, including to purchase equipment and inventory, stock up on office supplies, kick-start your marketing efforts or cover other costs.

Low rates: Depending mostly on your credit score, personal loans can have lower annual percentage rates than other financing products — such as credit cards — saving you money over the lifetime of the loan. They also have fixed payments that ensure your loan is paid back within a certain time frame so you'll avoid compound interest, or interest on top of the original interest.

Easier to qualify: If you’re just starting your business, you may have more luck qualifying for a personal loan than a business loan. When underwriting business loans, lenders look at your company’s revenue and time in business, along with your personal credit score. For a first-time business owner seeking to fund a new business idea, you won’t have some of the history that small-business lenders are looking for.

Personal loans are underwritten based primarily on your credit score and your income. That means you can include other income sources — maybe you still have your 9-to-5 job, or maybe you have rental properties — to supplement the initial trickle of income you’ll earn from your new venture.

Fast funding: The majority of personal loans are funded within one week of approval, though if you choose to apply with an online lender, you’ll likely receive funds by the next or even same business day. This may be faster than some business loans. For example, the process of applying for and receiving a traditional SBA loan can take 30 days to a few months.

Drawbacks of using a personal loan to start a business

May not receive a full tax deduction: Interest paid on a personal loan is typically not tax deductible, unlike interest paid on business loans. However, there’s an exception for when you use a personal loan to cover business expenses. To get the full deduction, you’ll need to make sure no portion of the loan is used for another type of expense.

Personal credit or assets could be at risk: If you take out an unsecured personal loan and fail to repay it, your credit may take a hit. This will make it harder to access affordable financing in the future. If you take out a secured personal loan and tie it to an asset like your car or home, the lender can seize that asset if you default.

Small loan size: Personal loans tend to have smaller loan amounts — ranging from about $1,000 to $50,000 for most lenders — than business loans. For a small startup, the size might be just right, but if you own a more established company or plan on making big purchases, you’ll want to look for loans that offer more financing.

Shorter repayment terms: Most personal loan terms range from one to seven years, so if you need a longer repayment term, you’re better off looking at other small-business financing options. SBA loans tend to have the longest repayment terms, ranging from 10 to 25 years.

Alternatives to personal loans for business

Small-business loan: If you're an established business and want to explore other options, NerdWallet has a list of the best small-business loans. These loans are typically issued only for businesses with a year or more of history and revenue.

Business line of credit: A business line of credit is a type of small-business loan but with more flexibility. It works like a credit card, letting you borrow up to a certain limit and then paying interest only on what you borrow, so it’s ideal for business owners who aren’t sure of the scope of their financial need.

Business credit card: A business credit card offers revolving credit that’s ideal for short-term expenses and may be easier to qualify for than a small-business loan. Business credit cards also offer rewards, like cash back or travel points, and can help keep your business and personal finances separate.

Last updated on June 28, 2022

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Personal Business Loans: What You Need to Know

Frequently asked questions

Further reading