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There are many reasons why a company may choose to take out a loan. A sudden spike in sales might have created a need for some additional cash flow, or maybe that influx has created the need to expand. While a tailored business loan would seem to be the obvious choice, many smaller companies still side with a personal loan, believing in its security and simplicity. Here we consider the pros and cons of both.
If you opt for a business loan, the loan will be held in a joint account with easy access for all partners. With the loan guaranteed by each partner, the risk placed on each individual is greatly reduced. If you decide to apply for a personal loan, lack of joint access to your company’s loan may affect the efficiency of your company, or create issues of responsibility if the business is unable to meet repayments.
However, there is the option of taking out a joint application personal loan. These loans usually have a maximum of two applicants, although some allow up to four.
Before you apply for a loan, there are a number of other factors worth thinking about.
If a sudden spike in sales has resulted in outstanding invoices, invoice financing could be an option to manage the cash flow. This type of business loan comes with reduced risk, no asset requirements or interest payments.
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