Personal loans are unsecured and do not require collateral from the borrower. Typically, a personal loan can be sought to cover various short-term expenses such as medical bills, home improvement, wedding or vacation planning, etc.
Personal loans available can be of several types. For example, a debt consolidation loan allows one to consolidate multiple debts into one loan with a low-interest rate. Similarly, a home improvement loan can be utilised for renovation purposes.
On the other hand, business loans are funds available to meet all types of business needs from various banks, non-banking financial companies (NBFCs), or other financial institutions. Business loans can be customised to address specific needs such as expansion, capital infusion, purchasing machinery, etc, for small and large businesses.
Generally, business loans are of two types: those offered on the basis of collateral and those without any security. The loan approval process varies from one lender to another and depends on a range of factors, including the type of credit.
A personal loan is a multipurpose loan where there is no regulation on the use of cash. The interest rates in the case of personal loans are high.
On the other hand, business loans can be used to only fund business-related activities. Unlike business loans, procurement of a personal loan requires no collateral.
Personal loans are to be repaid in a short span of time, while business loans have a comparatively longer repayment tenure.
Generally, a personal loan amount is disbursed in a short period, while it takes longer to process and disburse business loans.
While minimal documentation is needed to secure a personal loan, there is a long list of documents that are required to be furnished to procure a business loan. The approval processes in the case of personal and business loans can be relatively quick if the credit history of an individual is good.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.