What type of loan is right for your business? Check out January's top personal loans

Whether you’ve just started a new business or are seeking additional finances to expand your operations, you have options when it comes to selecting the type of loan to borrow funds.

The latest lending indicators from the Australian Bureau of Statistics (ABS) revealed that the value of new loan commitments for fixed term personal finance fell 1.3 per cent in November, following a decline of 0.5 per cent in October.

Commitments for personal lending were dragged down by a drop in lending for personal investment, down 9.3 per cent in November. New loan commitments for road vehicles also slumped 2.9 per cent. However, lending for household goods rose 5.1 per cent to an all-time high of $154 million.

Despite the borrowing downturn, there are still plenty of competitive personal loans available to support your financial needs, such as in business. Deciding between a business loan and a personal loan requires careful consideration.

What’s the difference between a business loan and personal loan?

A business loan is used for funding specific business needs and can be inconvenient due to the vast amount of paperwork involved. On the other hand, obtaining a personal loan may be simpler, but you risk losing your assets if you default on a secured loan.

The primary differences between these two types of loans include:

Application process - Personal loan applications are typically fast and simple, whereas a business loan application can often be complex and time-consuming.

The amount you can borrow - Lenders will approve an amount for a business loan based on the future prospects of your company. This may allow you to borrow more than you could with a personal loan.

Loan flexibility - How you spend the money you borrow is generally more flexible with personal loans than business loans.

Credit History - With a personal loan, you’re building your personal credit history. A business loan will count toward that business’ credit history. Which is right for you will depend on your future financial motivations.

Finding the personal loan that’s right for you

If you're seeking a personal loan with repayments that fit your budget, credit score and desired loan term, RateCity's personal loans calculator can provide you with an estimate to help find one that's right for you.

RateCity has ranked the top-rated personal loans on our Personal Loans Leaderboard using our comprehensive, game-changing Real Time Ratings™ system. This system gives loan products a score out of five, based on cost and flexibility. Unlike other ratings systems that rank their products once or twice a year, our Real Time Ratings™ system ranks products live as you use the site, helping you narrow down your shortlist of personal loan options.

Rankings are correct at the time of publishing. Please note lenders may trade places on the list as interest rates and fees change and RateCity’s tracker reflects these movements.

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