Denied a Small Business Loan? A Personal Loan Could Be Your Next Best Bet

You may have another option for getting your venture off the ground.

Starting and maintaining a small business can take a lot of work -- and a lot of money. And if you don't have a massive pile of cash in your savings to tap, you may need to take out a loan to get your venture started.

Your first choice in that regard may be to pursue a small business loan. With a small business loan, you might get your hands on the money you need to rent office space, purchase equipment, stock up on supplies, invest in marketing, and do whatever else it takes for your venture to be successful.

But lenders aren't always so quick to give out small business loans. For one thing, they can be risky for lenders, because unfortunately, many new businesses don't survive past their first year or two.

In fact, some lenders have specific policies stating that they won't give out a small business loan unless the company in question has been in operation for a certain amount of time. That could be six months, a year, two years, or longer.

If you're unable to secure a small business loan, your next best bet may be a personal loan. Here's how you might benefit from taking one out.

A flexible borrowing solution

One of the nice things about personal loans is that they allow you to borrow money for any purpose. You can use your personal loan proceeds to renovate your home, take a vacation, or -- you guessed it -- start a business, or continue funding business operations.

There are some advantages that small business loans have over personal loans. First, you can generally deduct the interest you pay on a business loan on your taxes, whereas personal loans don't let you do that. And you might snag a lower interest rate on the sum you borrow with a business loan.

But a personal loan may be easier to qualify for than a small business loan. And if your credit score is great, then you might qualify for a competitive interest rate on a personal loan.

Also, personal loans tend to close quickly, and the application process itself can also be swift. It can take more time to apply -- and get approved -- for a small business loan. As such, if that option doesn't work, it pays to turn to a personal loan as a backup, especially if you have solid credit.

Will borrowing limits trip you up?

One thing to keep in mind is that you can generally borrow more money with a small business loan than with a personal loan. So if you need a large sum of cash to get your venture going or keep it running, then a personal loan may not provide enough capital to meet your needs.

But if your borrowing needs aren't that extensive, then it pays to look at a personal loan if a small business loan doesn't work out. You may find that it's an easy, hassle-free way to get your hands on the money you need to ensure that your venture is successful.