One of the biggest obstacles an individual will face is the acquisition of business start up funding. To get funding you have to prove a whole lot of things the bank will ask. Income statement, business plan, what business history do you have, what’s your credit score? And a whole lot more.
This means that a major portion of small businesses and individuals like you face rejection when going for business loan and this is mainly due to strict standards.
Alternative lenders might be a suitable option. As statistics indicate that only about 56.5% of small business get loans approved. This still means that a significant portion of small businesses and individuals seeking capital face rejections. This is because of the fact that even alternative lenders have requirements that you need to fulfill in order to get a loan approved.
This is a tricky scenario, however with the right approach one can tackle this complication. Business loans often get rejected because of low credit scores. Or maybe just because of the fact that your business hasn’t been in existence for long hence it lacks a continuous cash flow.
Insufficient collateral falls under the second most common thing after insufficient cash flow that a loan request might be rejected from a bank. However, if insufficient collateral is your only reason of concern then alternative lenders will lend you out. Although we still believe that personal loan would be a better option
The answer is simple, go for a personal loan. Here are a few scenarios in which a personal loan might be a better option than a business loan.
Business lenders like to lend loans where there are high chances of recovery. If your business doesn’t have presentable facilities, a high cash flow and a good history. Chances are that it will get rejected. Hence a personal loan would be a more feasible option.
If you’re looking to borrow a small amount of $25,000 or less, you may not need to provide a lot of documents. You might just get an unsecured loan. But if you seek a larger amount, then you may have to prove your employment status. Personal loans can be as high as $80,000.
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