Getting a personal loan to finance your small business is the best option if your business is new and you don’t have any solid record of sales or business property to use as collateral. With personal loan, you can easily qualify if your credit score and personal income meets the criteria. Because it is a personal loan, you won’t be able to build up your business’ credit history and the interest also cannot be deducted on the income tax. The following are the 4 best personal loans that you can use to fund a small business.
Prosper requires its borrowers to have a minimum credit score of 640 and their debt-to-income ratio must be not more than 50%. There is no need to submit any collateral to apply for the loan but they can repossess your assets in the event that you fail to follow up on the payment. With Prosper, you can borrow up to $40K. If your credit score level is good, you can qualify for a low interest rate which is around 5.99%. The maximum interest rate they charge is 35.99%. It has no prepayment penalty. It takes 3 – 5 business days for the fund to be released.
Sofi lets you borrow from $5,000 to $100K in the personal loan. They offer both fixed and variable APR rates starting from 5% – 15%. Selecting the autopay option will help you to get an interest rate as low as 5.49%. To qualify for a Sofi loan, you must have a minimum credit score of 660. However, most people who apply for Sofi have a credit score of 700 and higher. Sofi also do not state a minimum income but borrowers generally maintain an annual income of more than $100K.
LightStream is another company that offers a loan amount from $5K – $100K. Its APR is the lowest compared to other lenders starting from 3.09% for auto pay. If you sign up the loan without setting up auto pay, your interest rate will be 0.50% higher. There is no origination fee and funding can take place in the same business day if the application gets approved. Co-signers are welcomed. Borrowers generally have a good credit score and a long credit history.
Loan Moz personal loan can approve a loan amount from $5K – $50K. The APR interest rate that Earnest usually charge is within 5.49% – 18.24%. The loan is repaid over the course of 3 – 5 years. The repayment due date can be changed according to your convenience from your account. You need to have a credit score of 660 to qualify for the loan. It takes about 1 week for them to release the fund once the loan is approved.