Personal Loans for the Self-Employed - Useful or Not?
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| Photo by bruce mars on Unsplash |
Hanifmr.com - Financing your business idea is not an easy matter for many founders. You can only get a loan from banks if you have no Schufa entries and can provide collateral.
If, on the other hand, the business idea is rather unusual and you don't have a lot of collateral to show, banks nowadays usually take a stand.
In the following, you will find out whether a personal loan for the self-employed is a good alternative in this case and what the advantages and disadvantages are.
Note: The following statements are not advice, but my personal opinion and experience.
Personal Loans for the Self-Employed
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| Personal Loans for the Self-Employed - Useful or Not? |
The world is changing. Not only have the opportunities for publication improved radically, but the power of banks has also decreased in the financial sector.
As an alternative to bank credit, personal credit has developed in recent years. The money does not come from a bank, but a greater or lesser number of private individuals and investors.
The idea itself is not that new. Anyone who used to get a loan from grandma for the new company also used a personal loan.
There are now even special brokers of personal loans for the self-employed and start-ups.
Does It Make Sense or Not?
Like everything else, personal loans have advantages and disadvantages.
Advantages:
- The chances of getting a personal loan are often much better for start-ups and the self-employed than to get a bank loan. In addition, there are of course significantly more potential lenders with personal loans.
- With a personal loan, it is also much easier to finance unusual business ideas. Private investors are often even more open to creative ideas than boring me-too start-ups.
- A personal loan is more flexible. This not only applies to the level of the interest rate and the repayment period but the question of collateral can also be flexibly negotiated.
Disadvantage:
- Of course, flexibility also has the disadvantage that you may pay too much and thus get even more into debt. It is important to make good comparisons here.
- The costs can fluctuate widely and especially with the many personal loan brokers that are now on the web, you should look carefully at what costs are incurred. Even and especially when a loan application does not lead to success.
The advantages of personal loans are indisputable. Nevertheless, one should proceed here at least as carefully and precisely as with a bank loan.
Failure to repay a personal loan and fall into debt has the same negative effects.
Providers
A personal loan can of course be used directly by one or more private individuals. However, if it is not exactly family members, it is usually difficult to find such private lenders.
That is why online platforms have emerged in the past that broker personal loans. There you can publish loan requests and interested investors can register for them within a certain time.
4 well-known personal loan brokers in Germany are (alphabetically):
Auxmoney
In Auxmoney * is a credit platform, which has long been on the market. It used to be a bit of disrepute, because, for example, costs were incurred even with non-financed loan applications. The costs are now more transparent and there are no more costs for the application itself.
With more than 40,000 investors, according to the company, there is a very good chance that your application will be financed. Entrepreneurs and the self-employed are particularly welcome.
The interest rate is based on the aux money score, which is calculated from various data. You should look carefully here because the nominal interest rate can vary widely.
You can take up to 25,000 euros here.
Lendico
Lendico has also been on the market for a while, and it is being used intensively, as you can see from the latest financings on the homepage.
You can finance between 1,000 and 25,000 euros without any cost risk. Costs only arise when the loan request has been financed by the investor.
The interest rate is based on the so-called Lendico class into which you are classified. However, the nominal interest rate is very different. Here, too, it is not insignificant which risk you bring yourself. But at least there is a chance to borrow money here.
Smava
Smava also offers or mediates personal loans.
1,000 and 75,000 euros are possible, which are made available by private investors.
You should read the information on the website carefully and find out more before using this service. It sounds interesting.
The interest rate is also based on your creditworthiness and there is often no avoiding collateral (or credit protection insurance).
Zencap
Zencap specializes in SME financing. This provider is brand new to the market and has chosen the niche of corporate personal loans.
However, this financing platform is aimed at somewhat larger companies. You have to be registered in the commercial register and the average turnover has to be at least 100,000 euros per year. So rather nothing for start-ups and sole proprietors.
For this, you can then take out personal loans between 10,000 and 150,000 euros. Here you have 3 weeks to find enough investors to finance.
Depending on the valuation, the interest rate is low or very high.
Conclusion
Personal loans are a new and exciting way for the self-employed and businesses to get money.
However, the advantages are offset by a few disadvantages or rather risks that should be considered and checked.
And you should be aware that if you have a bad credit rating you have to pay quite high interest. But at least in such a case, you have the chance of a loan, unlike with banks.
The bottom line is that I think it's good that these financing alternatives are available today.
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