Should you get a personal loan to start a business?

Learn what's in it for you and under what circumstances you could apply for it.

Starting a business is a rewarding yet challenging experience. You get to make your passion project a reality and steer it in your preferred direction with a solid business idea, a defined market, and a platform to sell your products. However, keep in mind that this will not be possible without proper funding for your capital expenses.

For budding entrepreneurs like you who would like to get their businesses off the ground, it's best to consider viable financing options like a personal loan-especially when you don't have enough funds yet to get what you need at the moment.

Here are some reasons why a personal loan is the preferred choice:

  1. It's a less expensive borrowing option

    A personal loan is known for its flexible nature. This means you can apply for it for any financial purpose-and that includes setting up a small business. Once approved, you can use the funds to purchase materials for your first batch of products or for testing your business concept.

    Let's say you would like to sell aroma candles, but you don't have much experience yet making them in large quantities. You can use the loaned amount to buy materials, and check whether you have the right strategy in selling them to your market.

    Another good reason for taking out a personal loan is that it can be paid within a well-defined period. You can choose your preferred repayment terms-ranging from 12 to 60 months. Monthly payments for a personal loan could be less expensive than that of credit cards or any other type of loan.

  2. It's easier to qualify for

    Compared to a business loan that will usually require the loan applicant to operate a business venture for a minimum of one year and have a minimum annual revenue, a personal loan will assess your capability to pay by checking your credit score and financial situation.

    Since a personal loan can be approved within 24 hours, you don't need to wait anxiously for feedback from the bank regarding the status of your loan application.

  3. There's no collateral required

    A personal loan is usually an unsecured loan so there is little to no risk in availing of it. It can help you obtain funds without you having to offer any collateral in the process.

    Remember to make timely payments, though, to avoid negatively impacting your credit score, which in turn limits your ability to obtain credit in the future.

    Since a personal loan is an obligation, understanding the terms and taking utmost responsibility in making payments are necessary. And before you even apply for a loan, always try to assess your financial state and come up with concrete ways to substantially grow your business.

If you think that you are ready to apply for a personal loan - try applying now for a Citi Personal Loan. With its simple, fast and easy application process, you can get up to P2 million with no collateral or guarantor. Get approved in as fast as 24 hours and pay your loan for up to 5 years.

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