Difference between Business / Personal Loan
Let us understand the basic points of Business Loan and Personal Loan
Business Loan
Restricted to business-related purposes such as buying inventory, machinery, expansion, or managing cash flow.
Often secured by business assets, equipment, or property, though unsecured options exist for smaller amounts.
Offers higher loan amounts tailored to business needs, determined by business turnover, profitability, and vintage (operating history).
Interest paid is typically tax-deductible as a business expense, and rates are generally lower if secured.
Personal Loan
Used for personal expenses like medical bills, vacations, home renovations, or debt consolidation.
Typically unsecured, meaning no collateral (asset pledge) is required.
Amounts are generally lower, based on personal income, credit score, and debt-to-income ratio.
Interest paid is not tax-deductible.