Not many lenders will offer you a personal loan to start a business. There are restrictions and risks, so always check the terms and conditions before you apply.
Some lenders allow you to get a personal loan to start a business, but not all of them.
The lender will ask you what you want the loan for, so It's worth checking before you apply for a personal loan. Otherwise you run the risk of being rejected.
Business loans are secured loans specifically designed for businesses.
But it can be tricky to take out a business loan to start your company because most lenders want you to show 2 years of accounts when you apply.
Start up business loans are designed for new businesses.
|Personal loans||Business loans|
|Taken out in your name||Taken out in the name of the company|
|Borrowing amount based on your income and credit record||Based on company finances|
|Usually up to £25,000||Could be up to £5 million|
|Best APR around 3%*||Best APR around 6%*|
* Top results on money.co.uk as per December 2019
A personal loan that you use for a business will be in your name only. That means that you will be personally responsible for making the repayments.
Ideally, the business should make enough profit to cover the repayments, but this may not happen. This means you'll have less disposable income in your personal life.
If you're unable to keep up with the payments it may damage your personal credit rating, which could affect your ability to borrow in the future.
Need a loan? Compare loan lenders side by side to find one that is cheap to pay back, lets you borrow what you need and has repayments you can afford.