Can't Get a Business Loan? Take out a Personal Loan [Infographic]

  • June 7th, 2011
  • Dan Bischoff

Even after exhausting every resource you have, you might not be able to qualify for a business loan. When that happens, an option might be to take out a personal loan to get the capital you need for your business. Below is everything you need to know about personal loans:

Can't Get a Business Loan? Take out a Personal Loan [Infographic]

What is a personal loan?

A personal loan can be used for just about anything. It is a loan made for any purpose not specifically defined or secured by a specific asset. Personal loans are usually made for general expense purposes.

There are several types of personal loans out there for borrowers. The two most commonly known are secured and unsecured personal loans.

    Secured Loans

    A general purpose loan may be specifically secured by a cash flow or asset. Second mortgages are usually loans for short-term cash flow needs. Secured loans typically have a lower interest rate.

    Unsecured Loans

    Unsecured loans have no specific claim on assets or cash flow. Instead the lender looks to the general creditworthiness of the borrower. Because this is a greater risk for lenders, they charge higher interest rates.

Primary Types of Personal Loans

These include peer-to-peer loans, home equity loans, home equity line of credit, short term personal loans, fast cash advance loans and military payday loans.

Most Common Reasons People Take Out a Personal Loan

  • 49% of personal loan applicants are seeking a loan for consolidation of debt.
  • 16% for business use
  • 10% for home improvement
  • 5% for education
  • 4% for auto/vehicle
  • 16% for other uses

Peer-to-Peer Lending on the Rise: Interest Rate Breakdown

The national average credit card rate is currently 14.68% APR, while peer-to-peer loan interest rates generally range from 6% to 9% with a fixed 36-month term. Peer-to-peer lending will soar at least 66% to $5 billion by 2013.

Who Borrows?

People who need to take out loans in order to pay off debt, finance their business, repair their home or other general expense purposes. 43% of American families spend more than they earn each year. Personal bankruptcies have doubled in the past decade, giving American more reason to take out a personal loan.

Understanding the Financial State of the Average American Borrower

The average American borrower has a credit score of 738, and gets an average loan size of $4,402.

About the Author

  • Dan Bischoff

Comments

  1. i would like to speak to a representative in reference to a buisness loan phone i can be reahed is 347-22-1639

  2. Im curious about peer to peer lending

  3. Maybe I am being conservative but I am abit concern about using loans to finance business venture. I am the writer of http://www.squidoo.com/how-to-set-your-financial-right-and-enjoy-your-life- who gives tips and advice to people on how to manage their finances.

    • for some people, unsecured loans are the only way to get throught these difficult days.
      we see it very much in italy: on http://prestiti.supermoney.eu/ we aggreagate the biggest and most convenient banks and show to our users the best personal loans on the market – as a result, we haven’t ever had as many visitors as we currently have.
      unfortunately, banks are not giving out a lot of money: to have a loan, you must have a very good financial profile. but if you have a very good financial profile, plus a nice and stable job, why do you need a loan..??

  4. The loan breakdown is interesting. Current Lending Club data has it at..

    45% debt_consolidation
    12% credit_card
    11% other
    8% home_improvement
    6% major_purchase
    5% small_business
    4% car
    2% wedding
    2% medical
    2% moving
    1% educational
    1% house
    1% vacation
    0% renewable_energy

  5. Dear Sir or Madam!
    We are from Tashkent Uzbekistan. We are touristic company. and we want to buy two coach bus for tourists. Could I get a loan from your company or organisation.

    Best regards,
    Otabek Mirzaakbarov

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  7. Greetings! This is my first comment here so I just wanted to give a quick shout
    out and tell you I really enjoy reading through your blog posts.
    Can you recommend any other blogs/websites/forums that cover the same topics?
    Thanks a ton!

  8. nice to read the content nicely explained about the personal loans and it advantages to full fill our day to day needs.