If you are interested in setting up a business in the private sector, then one of the ways through which you can do is by availing a personal loan. You can avail a personal loan based on certain factors and accordingly set a business in the private sector. We will have a further look into personal loans you can avail if you wish to set your own business in the private sector.
Generally, you can avail a personal loan ranging between Rs.50,000 and Rs.15 lakh with repayment tenure ranging between 1 year and 5 years. The rate of interest levied may differ from bank to bank.
- You must be a salaried employee working for a private, public, or a government firm.
- Minimum age of 21 years.
- Maximum age of 60 years at the time of the maturity of the personal loan.
- Minimum monthly income of Rs.15,000.
- Application form duly filled by you
- KYC documents
- Duly signed loan agreement form and Standing Instruction (SI) Request form or ECS form
Advantages of taking a Personal Loan for your Business
Let us discuss some of the key advantages of applying for a personal loan for your business:
- A personal loan is more cost-efficient when compared to its alternative: business loan.
- Personal loans can be repaid on a monthly basis at lower rates of interest as opposed to conventional business loans.
- The minimum revenue requirement for a personal loan is much lesser compared to the requirement for a business loan.
- Personal loans are the right choice for individuals with minimal business history.
- Personal loans are good for business people who have a poor credit score.
- You do not have to give any collateral to your loan provider when you need a personal loan.
- When you take a personal loan, the bank will not interfere in your business or impose restrictions on the functioning of your business.
- The availability of personal loans is higher than business loans for new entrepreneurs in the private sector. Most banks are reluctant to give business loans to start-up companies.
- There is lesser paperwork for personal loans.
- Personal loans come with flexible repayment options.
- Personal loans can be paid in equated monthly installments.
How can a Company in the Private Sector use a Personal Loan?
Let us take a look at some of the ways a business can fund its activities with a personal loan:
- If a sole proprietor or a partnership firm wants to start a business, they can apply for a personal loan and procure it without much delay. Sole proprietorships and partnership firms generally will have a low budget during the initial period of the business. Hence, a personal loan is ideal for this kind of budget. They will incur lower costs with a personal loan.
- A personal loan is great even for a large company. The company can fund its production and marketing activities on a small or a medium scale with a personal loan.
- Companies of all sizes can finance their needs such as office property, office accessories, office furniture, and so on.
- Personal loans can be used to fund activities such as hiring and recruitment of manpower in the private sector companies.
- If an established business wants to fund its expansion projects or brand new projects, it can apply for a personal loan. A company can recreate its whole business strategy with a personal loan by planning wisely.
- When a company with lesser years of experience in the industry, is denied a business loan, a personal loan is a superb choice.
Best Banks that offer Personal Loans in India
Let us view some of the top banks that offer personal loans in India:
When you are planning to start a business or expand your business, you need to be aware of all the risks associated with it. Taking a personal loan is a brilliant less-known way to capitalise the endless requirements of your company in the private sector.