Business loan cost

[slipstream 1985]

Why are business loans so much more than personal loans? Is it because alot of business loans are for ltd companies and the person behind the business is less liable?

[Hashtaggggg]

I would guess the risk is assessed and a offer is made, or not.

I have been involved in 2 business in the past few years, one very profitable and stable, the other less so.

The stable one could borrow money very cheaply.

the less stable was offered loans that were far more expensive.

[slipstream 1985]

I see, Compared to personal loans the apr is terrible. I'm toying with the idea of multiple personal loans.

[Ean218]

If there is no obvious security then limited liability makes a company loan very much riskier from the POV of the lender.

Mulitple personal loans may be cheaper but you have then given up the benefits of limited liability and also have the loans down to you personally from a credit reference angle. If you are prepared to forgo limited liability then why not just stand behind a company loan as a guarantor which would reduce the risk to the lender?

[wheelerc]

I found the rates for a business loan were still high even with a personal guarantee.

However I'm not sure if you went to your personal bank and asked for a personal loan to fund your limited company they would be happy about that either.