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Personal Business Loans: Compare Financing Options

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.

Jackie Veling
By
Last updated on December 18, 2023
Edited by
✅ Fact checked and reviewed
Dawnielle Robinson-Walker
Edited by
✅ Fact checked and reviewed

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NerdWallet's personal loans content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in consumer lending. Their work has appeared in The Associated Press, USA Today, The New York Times, MarketWatch and many other national, regional and local publications. They have been cited in publications including The Harvard Kennedy School, and appeared on NerdWallet's "Smart Money" podcast as well as local TV and radio.
Featured partners for Personal Loans
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SoFi Personal Loan
SoFi Personal Loan
SoFi Personal Loan
5.0
NerdWallet rating

SoFi offers online personal loans with consumer-friendly features for good- and excellent-credit borrowers.

Visit Partner
Popular lender pick
Other visitors like them, we think you will too!

Personal Business Loans: Compare Financing Options

Lender
NerdWallet Rating
Est. APR
Loan amount
Min. credit score
Learn more
Upgrade

Upgrade

Top 3 most visited 🏆
Visit Lender
on Upgrade's website
on Upgrade's website
Check Rate
on NerdWallet
on NerdWallet
Best for Borrowers with bad credit
Rate discount

8.49-35.99%

$1,000-$50,000

560

SoFi

SoFi Personal Loan

5.0
/5
Best for Borrowers with good to excellent credit
Rate discount

8.99-29.99%

$5,000-$100,000

None

Discover

Discover® Personal Loans

Visit Lender
on Discover's website
on Discover's website
5.0
/5
Best for Borrowers with good to excellent credit
Fast funding

7.99-24.99%

$2,500-$40,000

660

Upstart

Upstart

4.5
/5
Best for Borrowers with bad credit
Fast funding
Flexible payments

7.80-35.99%

$1,000-$50,000

None

Prosper

Prosper

Check Rate
on NerdWallet
on NerdWallet
4.5
/5
Best for Borrowers with bad credit

8.99-35.99%

$2,000-$50,000

560

Lending Club

LendingClub

4.5
/5
Best for Borrowers with fair credit
Flexible payments

9.57-35.99%

$1,000-$40,000

600

BestEgg

Best Egg

4.5
/5
Best for Borrowers with fair credit
Secured loans
Wide range of loan amounts

8.99-35.99%

$2,000-$50,000

600

Achieve

Achieve Personal Loans

4.5
/5
Best for Borrowers with fair credit
Rate discount

8.99-35.99%

$5,000-$50,000

620

Lightstream

LightStream

4.5
/5
Best for Borrowers with good to excellent credit
Rate discount

7.99-25.49%

$5,000-$100,000

660

LendingPoint

LendingPoint

4.5
/5
Best for Borrowers with good to excellent credit
Fast funding
Flexible payments

7.99-35.99%

$2,000-$36,500

660

Universal Credit

Universal Credit

4.0
/5
Best for Borrowers with bad credit
Fast funding
Rate discount

11.69-35.99%

$1,000-$50,000

560

RocketLoans

Rocket Loans

4.0
/5
Best for Borrowers with fair credit
Fast funding
Rate discount

9.12-29.99%

$2,000-$45,000

640

Our pick for

Borrowers with bad credit

Upgrade
Visit Lender
on Upgrade's website
on Upgrade's website
Upgrade

Upgrade

Est. APR

8.49-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Universal Credit
Universal Credit

Universal Credit

4.0
Est. APR

11.69-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Upstart
Upstart

Upstart

Est. APR

7.80-35.99%

Loan amount

$1,000-$50,000

Min. credit score

None

Prosper
Prosper

Prosper

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

560

Our pick for

Borrowers with fair credit

RocketLoans
RocketLoans

Rocket Loans

Est. APR

9.12-29.99%

Loan amount

$2,000-$45,000

Min. credit score

640

Lending Club
Lending Club

LendingClub

Est. APR

9.57-35.99%

Loan amount

$1,000-$40,000

Min. credit score

600

BestEgg
BestEgg

Best Egg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600

Achieve
Achieve

Achieve Personal Loans

Est. APR

8.99-35.99%

Loan amount

$5,000-$50,000

Min. credit score

620

Our pick for

Borrowers with good to excellent credit

SoFi
SoFi

SoFi Personal Loan

Est. APR

8.99-29.99%

Loan amount

$5,000-$100,000

Min. credit score

None

Lightstream
Lightstream

LightStream

Est. APR

7.99-25.49%

Loan amount

$5,000-$100,000

Min. credit score

660

Discover
Discover

Discover® Personal Loans

Est. APR

7.99-24.99%

Loan amount

$2,500-$40,000

Min. credit score

660

LendingPoint
LendingPoint

LendingPoint

Est. APR

7.99-35.99%

Loan amount

$2,000-$36,500

Min. credit score

660

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 two 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, kickstart 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, if you carry a balance — 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 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 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 couple 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 two 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.

How to get a personal loan for business

To get a personal loan for business, you’ll need to apply with a bank, credit union or online lender.

Some lenders, especially online lenders, may let you pre-qualify before submitting your application. That means you can see potential loan terms, including what interest rate you may qualify for, without submitting to a hard credit check, which can temporarily lower your credit score. Consider pre-qualifying with more than one lender to find the best rate.

Once you’ve decided on a lender, it’s time to submit your application. You’ll need to supply information like your personal details and contact information, your Social Security number and any supporting documents that verify employment and income.

Approval decisions can be instantaneous or take a few days. You’ll then sign the loan documents and receive the funds in your account, sometimes as early as the same or next day.

Once funded, make a plan for how you’ll manage your loan payments. Missing a payment can lead to late fees and a hit on your credit score.

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 December 18, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. 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. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. 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.

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: Compare Financing Options

  • Upgrade: Best for Borrowers with bad credit
  • Universal Credit: Best for Borrowers with bad credit
  • Upstart: Best for Borrowers with bad credit
  • Prosper: Best for Borrowers with bad credit
  • Rocket Loans: Best for Borrowers with fair credit
  • LendingClub: Best for Borrowers with fair credit
  • Best Egg: Best for Borrowers with fair credit
  • Achieve Personal Loans: Best for Borrowers with fair credit
  • SoFi Personal Loan: Best for Borrowers with good to excellent credit
  • LightStream: Best for Borrowers with good to excellent credit
  • Discover® Personal Loans: Best for Borrowers with good to excellent credit
  • LendingPoint: Best for Borrowers with good to excellent credit

Frequently asked questions

  • The best loan will depend on your business’s needs. If your business does not have a year or more of history or revenue, a personal loan can make sense as a potential financing option.

  • You can typically use funds from a personal loan for almost anything, including to fund your business.

  • To get a personal loan for business, you will need to apply and be approved with a lender. Approval is typically based on your credit, and once approved, you can receive funds within one week.

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