Loans |
December 09, 2020Processing Personal Loan Vs Processing Business Loan
As the name suggests, both of the mentioned loans solve the purpose of credit aid for the
individual and the commercial requirements respectively. The individual objective for capital
requirements can be anything like home renovation, abroad vacation, educational expenses.
While the commercial needs can be loans for business expansion, purchase of new pieces of
equipment, hiring, etc. While considering applying for any of these, it necessary to
understand how does the processing works for both.
1. Eligibility Criteria
a. Personal: To avail of personal loan services, one must be a citizen of India
working with a public or private enterprise or an MNC.
b. Business: The businesses with a few vintage years and income statements
audited by a chartered accountant are the key criteria for a business loan.
2. Loan Documents
a. Personal: The list of documents required are identity proof like Pan card, address
proof like aadhar card, and income proof like salary slips or bank statement.
b. Business: The list of documents is different from that of Personal loans and includes
KYC documents, business proof showing business existence, and bank account statements.
3. Secured or Unsecured
a. Personal: They are unsecured credit aids which do not require any collateral from the
consumer.
b. Business: Usually these are secured loans to rely on something if the business doesn’t
work. However, with emerging options day-by-day a few NBFCs have launched collateral-
free business loans as well.
4. What are its advantages?
Personal Loans: Its comparatively easier to apply for personal loans without providing any
kind of collateral. Also, it can be used as a consolidated repayment option for all your
existing loans.
Business Loans: They offer extensive tax benefits and deductions on the loan and is available
at a much lower interest rate.
In Conclusion
While applying for any of these, there is a considerable amount of difference to be analyzed
between personal and business loans. Personal loan products are accompanied by higher
interest rates but short tenure while business loans provide significantly larger capital and tax
benefits. Choosing between the two also depends on your capital requirement objectives.