Suppose you have a great business idea or an urgent need for cash, but you’re unsure whether to apply for a personal loan or a business loan. But making the wrong choice can cost you more in the future or certainly affect your credit profile. In this blog, we bust out all you need to know about personal loan vs business loan features, benefits, eligibility, interest rates, tax treatment, and the right situations to choose each. At the end you will know exactly which loan is best for you
What Is a Personal Loan?
A personal loan is an unsecured loan offered by banks and NBFCs primarily to the salaried class. Because no collateral is required, the main factors banks will consider are your income and credit score. And with Bikesh Finserv, you can access personal loans from top lenders starting at 9.75% per annum, with amounts up to ₹2 crore and approval in as little as 30 minutes.
Key Features of a Personal Loan
• Loan Amount: Up to ₹2 Crore
• Interest Rate: Starting from 9.75% per annum (but it varies by lender and their profile)
• Tenure: 12 to 72 months, flexible repayment to suit your budget
• No Collateral: it is purely unsecured; there is no property or asset to pledge
• 100% Digital Process: Apply from your phone, no branch visit needed
• Fast Disbursal: Funds credited in 30 minutes to 4 hours
Benefits of a Personal Loan
1. Speed and Simplicity: Personal loans are one of the quickest financial instruments available. Since the process is entirely digital and requires minimal documentation (just like your Aadhaar, PAN, salary slips, and bank statements),
2. No Collateral Required: You do not need to put your home, vehicle, or any asset. This makes personal loans ideal for individuals who do not own high-value property.
3. Flexibility of Use: Unlike a business loan, a personal loan has no restriction on how you use the money. You can fund a wedding, travel abroad, consolidate existing debts, or renovate your home or even use it for business purposes.
4. Competitive Interest for Good CIBIL: Borrowers with a high CIBIL score of 750 or above get substantial interest rates.
5. Flexible Tenure With repayment options ranging from 12 to 72 months, you can choose an EMI that fits comfortably within your monthly budget.
Eligibility Criteria for a Personal Loan
To qualify for a personal loan, you generally need to meet the following requirements:
• Age: 21 to 58 years
• Employment: Salaried individual with 1–3 years total work experience
• Minimum Monthly Income: ₹20,000+ in metro cities; ₹15,000–₹20,000 in non-metro cities
• CIBIL Score: 750+ recommended (lower scores may be approved at higher rates)
• Employer Category: MNC, PSU, and government employees receive preferential rates
Personal Loan Interest Rates at a Glance
| Lender Type | Interest Rate (p.a.) | Processing Fee |
| Top Private Banks | 8.75% to 10.99% | 0.5% – 1% |
| Public Sector Banks | 8.75% and 18.00% | 0.5% to 1.0% |
| NBFCs | 9.99% to over 36% | 0.5% to 5% |
What Is a Business Loan?
A business loan is a financial product offered to the self-employed, individuals, MSMEs, proprietorships, and companies to fund their business operations, expansion, or working capital requirements. At Bikesh Finserv, we help you to get the best banks & NBFCs for business loans at 11.69% p.a. Loan Amount up to ₹ 1 Crore (Unsecured) & Disbursal with 24 hours
Key Features of a Business Loan
• Loan Amount: Up to ₹1 Crore (unsecured); higher with collateral
• Interest Rate: 9.97% – 24% p.a. (varies by category: SEP or SENP)
• Tenure: 12 to 60 months
• No Collateral for Unsecured Loans: Zero pledging for amounts up to ₹50 Lakhs – ₹1 Crore (for SEPs)
• Specifically for Business Use: Funds must be utilised for business purposes
• Higher Loan Limits for SMEs: Loan amounts often tied to 15%–30% of annual turnover
• Business History Required: Minimum 3 years of business NBFC operations (some NBFCs accept 1–2 years)
Benefits of a Business Loan
1. Tax Deductibility on Interest: This is a major financial advantage. The interest paid on a business loan is treated as a business expense under the Income Tax Act, making it tax-deductible
2. Higher Loan Amounts for Larger Needs: For businesses with strong financials, loan amounts can go significantly higher than personal loans.
3. Builds Business Credit History: Repaying a business loan on time helps build your company’s credit profile. This makes future borrowing easier and positions your business for better terms on subsequent loans.
4. Supports Working Capital and Expansion: Business loans are ideal for purchasing inventory, paying salaries during lean months, buying equipment, expanding to a new location, or bridging payment cycles.
Business Loan Categories at Bikesh Finserv
| Parameter | Self-Employed Professionals (SEP) | Self-Employed Non-Professionals (SENP) |
| Interest Rate | 10.50% – 14.50% p.a. | 13.00% – 24.00% p.a. |
| Loan Amount | Up to ₹50L – ₹1 Crore | 15%–30% of annual turnover |
| Tenure | 12 to 60 months | Up to 60 months |
| Key Document | Professional degree / certificate | GST Registration & ITR |
Personal Loan vs Business Loan
Now that you understand both products individually, here is a side-by-side comparison to help you evaluate which loan suits your situation:
| Feature | Personal Loan | Business Loan |
| Purpose | Any personal use | Business expenses only |
| Loan Amount | Up to ₹2 Crore | Up to ₹1 Crore (unsecured) |
| Interest Rate | 9.75% – 18% p.a. | 9.97% – 24% p.a. |
| Tenure | 12 – 72 months | 12 – 60 months |
| Collateral | Not required | Not required (unsecured) |
| Eligibility | Salaried (21–60 yrs) | Self-employed / Business (21–65 yrs) |
| CIBIL Score | 750+ recommended | 700+ preferred |
| Documents | ID, salary slips, bank statements | GST, ITR, balance sheet, business proof |
| Approval Time | 30 minutes – 4 hours | 24 – 72 hours |
| Tax Benefit | No (unless used for business) | Yes, interest is deductible |
| End-Use Restriction | No restriction | Must be used for business |
Note: Interest rates, loan amounts, and eligibility criteria mentioned are subjective to change . Actual terms depend on the applicant’s profile and the lender’s current policies. Bikesh Finserv is a loan intermediary, not a bank or NBFC. Loan approval is subject to the bank’s eligibility criteria.
Situations Where a Business Loan Is the Right Choice
If you need money because of your business operations and want financing that is structured and purposeful, then you want to get a business loan. Here are the cases where a business loan makes more sense:
1. You Need Working Capital for Your Business
A working capital loan is ideal for managing daily operations, buying raw materials, paying salaries, or paying vendor dues if you own an MSME, retail store, or service company. You can also deduct interest from your taxes.
2. You Want to Expand Your Business
Opening a new branch, upgrading machinery, hiring more staff, or entering a new market — these are growth investments that a business loan can fund. The loan is assessed against your business’s financial performance, giving you access to higher amounts than a personal loan.
3. You Are a Proprietor, Freelancer, or Self-Employed Professional
If you are a doctor, CA, lawyer, or small business owner, a business loan recognizes your professional income and offers rates starting at 10.50%.
4. Your Business Has a Strong Track Record
If your business has been operational for 3+ years, has consistent ITR filings, and has a CIBIL score above 700, you are likely eligible for a business loan at competitive rates. A strong profile unlocks better terms.
5. You Need More Than ₹50 Lakhs
Business loans, especially secured ones, can go far higher than personal loans. If your funding requirement is substantial, big, and purposeful.
Situations Where a Personal Loan Is the Right Choice
There are circumstances where a personal loan is not just convenient; it is genuinely the smarter financial tool. Here are situations where you should opt for a personal loan:
1. You Are a Salaried Individual Without a Registered Business
If you are employed and want to start a side business or any businesses, you may not have GST registration, ITR from business income, or business vintage. In such cases, a personal loan based on your salary is easier to obtain, faster to disburse, and perfectly legal to use for business purposes.
2. You Need Funds Urgently
Personal loans offer approval in as little as 30 minutes and disbursal within a few hours. Business loans require more documentation and typically take 24–72 hours. For a true emergency, medical, legal, or otherwise, a personal loan is faster.
3. You Need a Small Amount (Under ₹10–15 Lakhs)
For smaller amounts a personal loan is simpler and equally effective. You need to verify the documents to get started.
4. You Have a High CIBIL Score (750+) and Want the Lowest Rate
If your personal CIBIL score is excellent, top banks will offer you personal loan interest rates that may actually be lower than the business loan rates available to small or newer businesses.
(FAQ)
Q1. Can I use a personal loan for business purposes?
Yes, you can legally use a personal loan for business. Personal loans have no end-use restrictions, so you can use the funds for inventory, equipment, marketing, or any business need.
Q2. Is interest on a personal loan tax-deductible for a business?
This depends on usage and documentation. If you are a salaried individual, the interest on a personal loan is not automatically deductible. However, if you use the loan exclusively for business and can document this usage, you may claim it as a business expense. But the solution is that you can consult a CA for guidance specific to your situation.
Q3. What CIBIL score is required for a personal loan?
A CIBIL score of 750 or above is recommended for the best personal loan interest rates. Scores between 650 and 749 may still get approval, but at higher rates. Scores below 650 significantly reduce approval chances with most top-tier lenders.
Q4. What is the minimum salary required for an instant personal loan?
Most lenders require a minimum net monthly salary of ₹20,000 for metro cities like Mumbai, Delhi, and Bangalore. In non-metro cities, the threshold can be as low as ₹15,000. MNC, PSU, and government employees often get preferential treatment.
Still Confused? Let Bikesh Finserv Help You Decide.
Whether you need a personal loan or a business loan, Bikesh Finserv connects you with top banks and NBFCs across Mumbai for the fastest approval, lowest rates, and zero hidden charges. Feel free to connect with us, and we will be happy to assist you.