Can I use a personal loan to fund a business? +
Yes. A personal loan can be used for any purpose at your discretion, including funding a new business. Many founders use personal loans to cover startup costs, purchase inventory, or bridge cash flow before their business generates revenue. The debt is tied to you personally rather than to the business entity.
How is a personal loan different from a business loan? +
A business loan is underwritten based on the business's financials — revenue, time in operation, and business credit. A personal loan is underwritten based on your personal credit score, income, and debt obligations. For pre-revenue founders with no business history, a personal loan is often the only viable loan product available.
Does this affect my personal credit? +
Yes. A personal loan will appear on your personal credit report. The initial application results in a hard inquiry, and the outstanding balance will be included in your total debt obligations. Making on-time payments can actually help your credit score over time, while missed payments will negatively affect it.
What income documentation will I need? +
For unsecured loans, lenders typically want to verify personal income through recent pay stubs, W-2s, or tax returns. Self-employed applicants may need to provide 1099s or two years of tax returns. The goal is to confirm that you have a stable, verifiable source of income sufficient to service the loan.
Is the loan rate fixed or variable? +
Most personal loans carry a fixed interest rate, meaning your monthly payment stays the same for the life of the loan. This makes budgeting straightforward. The rate you receive will depend on your credit score, income, loan amount, and the lender's current offerings. Checking your eligibility does not affect your score.