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.
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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: Compare Financing Options
Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Est. APR ▾ ▾ | Loan amount ▾ ▾ | Min. credit score ▾ ▾ | Learn more |
|---|---|---|---|---|---|
 Upgrade Top 3 most visited 🏆 Go To Lender Siteon Upgrade's websiteon Upgrade's website Check Rateon NerdWallet on NerdWallet | 5.0 /5 | 8.49-35.99% | $1,000-$50,000 | 560 | Top 3 most visited 🏆 Go To Lender Siteon Upgrade's websiteon Upgrade's website Check Rateon NerdWallet on NerdWallet |
SoFi Personal Loan Top 3 most visited 🏆 Go To Lender Siteon SoFi's websiteon SoFi's website Check Rateon NerdWallet on NerdWallet | 5.0 /5 | 8.99-25.81% | $5,000-$100,000 | None | Top 3 most visited 🏆 Go To Lender Siteon SoFi's websiteon SoFi's website Check Rateon NerdWallet on NerdWallet |
5.0 /5 | 8.99-24.25% | $5,000-$45,000 | 660 | Check Rateon NerdWallet on NerdWallet | |
4.5 /5 | 9.57-35.99% | $1,000-$40,000 | 600 | Check Rateon NerdWallet on NerdWallet | |
 Upstart Top 3 most visited 🏆 Go To Lender Siteon Upstart's websiteon Upstart's website Check Rateon NerdWallet on NerdWallet | 4.5 /5 | 4.60-35.99% | $1,000-$50,000 | None | Top 3 most visited 🏆 Go To Lender Siteon Upstart's websiteon Upstart's website Check Rateon NerdWallet on NerdWallet |
 Best Egg Go To Lender Siteon Best Egg's website on Best Egg's website Check Rateon NerdWallet on NerdWallet | 4.5 /5 | 8.99-35.99% | $2,000-$50,000 | 600 | Go To Lender Siteon Best Egg's website on Best Egg's website Check Rateon NerdWallet on NerdWallet |
4.5 /5 | 6.99-35.99% | $2,000-$50,000 | 560 | Check Rateon NerdWallet on NerdWallet | |
 LightStream Go To Lender Siteon LightStream's website on LightStream's website Check Rateon NerdWallet on NerdWallet | 4.5 /5 | 7.99-25.49% | $5,000-$100,000 | 660 | Go To Lender Siteon LightStream's website on LightStream's website Check Rateon NerdWallet on NerdWallet |
 Universal Credit Go To Lender Siteon Universal Credit's website on Universal Credit's website Check Rateon NerdWallet on NerdWallet | 4.0 /5 | 11.69-35.99% | $1,000-$50,000 | 560 | Go To Lender Siteon Universal Credit's website on Universal Credit's website Check Rateon NerdWallet on NerdWallet |
 Rocket Loans Go To Lender Siteon Rocket Loans' website on Rocket Loans' website Check Rateon NerdWallet on NerdWallet | 4.0 /5 | 9.12-29.99% | $2,000-$45,000 | 640 | Go To Lender Siteon Rocket Loans' website on Rocket Loans' website Check Rateon NerdWallet on NerdWallet |
Our pick for
Borrowers with bad credit
Universal Credit
11.69-35.99%
$1,000-$50,000
560
Our pick for
Borrowers with good to excellent credit
SoFi Personal Loan
8.99-25.81%
$5,000-$100,000
None
Laurel Road Personal Loan
8.99-24.25%
$5,000-$45,000
660
Our pick for
Borrowers with fair credit
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.
» COMPARE: Best business loans for bad credit
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.
» Get started: Pre-qualify with multiple lenders for free on NerdWallet
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.
» MORE: How to apply for a personal loan
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 12, 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.
NerdWallet's Personal Business Loans: Compare Financing Options
- Upgrade: Best for Borrowers with bad credit
- LendingClub: Best for Borrowers with good to excellent credit
- Universal Credit: Best for Borrowers with bad credit
- Upstart: Best for Borrowers with bad credit
- Rocket Loans: Best for Borrowers with fair credit
- Best Egg: Best for Borrowers with fair credit
- Prosper: 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
- Laurel Road Personal Loan: Best for Borrowers with good to excellent credit
Frequently asked questions
- Is it better to get a personal loan or business loan?
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.
- Can you use a personal loan for business?
You can typically use funds from a personal loan for almost anything, including to fund your business.
- How do you get a personal loan for 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.
