Loans Against Savings: Your might ask why you would take a loan against cash that you already have - why not just use that cash? Several reasons: First, your personal cash should be held for personal uses. But, that does not mean that you can not pledge that asset (cash is an asset) to secure a loan (even a personal loan) that you will use in business. Second, by taking those funds in the form of a loan, you can better ensure that those monies will be paid back - preserving your personal savings and further, let the business (by using those loan funds) work to pay that loan back. Third, keeping your savings in an interest bearing account can offset some of your interest; for example, you place your savings in a CD earning 3% and take a loan against the CD at 8% - your net rate is only 5%. Lastly, taking a loan against your savings can go a long way to improving your personal credit score - making it easier for you to get a bank loan later down the road.

Loans Against Stock: If you hold personal stock - stock that you do not intend to sell for a while - you can easily use the value of that stock to secure a personal loan to start or grow your business. Thus, while the business works to repay the loan (paying for itself) your stocks continue to appreciate in value. If you have the asset, you might as well put it to work in all ways possible.

Loans Against Retirement Accounts: This does not mean self-directing your retirement accounts to invest in your business - but to actually take a loan against the value of your account(s). Not only does this provide many of the same benefits mentioned above, but, can further help to increase the value in those accounts as your business works to pay back the loan and interest.

Pro: Personal loans are usually fixed rate, longer term facilities - allowing you better flexibility with the loan as well as providing more affordable loan payments.

Cons: Personal loans (especially those unsecured) can come with higher interest rates and lender fees.

Pro: Unsecured loans have no collateral requirements - thus not putting additional burdens on your personal assets. Most business loans are either tied to a specific asset or require a blanket lien be placed on your entire business.

Cons: Unsecured loans, again, come with higher rates and higher lender fees.

Pro: Personal loans usually require less documentation.

Cons: Personal loans can impact your personal credit history (positively or negatively).

Pro: Personal loans are usually easier to get approved for.

Pro: Typically unrestricted use of funds!

Willingness To Repay: Does your credit history demonstrate that you have, in the past, meet all your obligations or does it show that when the going gets tough, you walk away. The higher your credit score the better.

Ability to Repay: Do you have the cash flow (from your business or other personal means) to make the monthly payments (to service the debt)? And, lenders don't just look for minimums but also include a cushion to protect themselves should your income (cash flow) falter a bit. Example, your $25,000 loan has a payment of $784 per month. For approval, your lender requires a 1.25X monthly income level - meaning your income (cash flow) has to exceed $980 or the lender will deny the loan application.

Value of Collateral: When using collateral, your lender will have to determine its value. Should you default, they want to ensure that the collateral will cover their loan, their lost interest, and all the fees it takes them to collect and sell off that collateral. This is usually why lenders will not lend more than 80% of an asset's value - keeping the remaining 20% in reserves should they have to take your property.

Very similar to the criteria above for a secured loan - without the collateral item.

However, since there is no collateral to fall back on to re-coup any losses, the lender will put more emphasis on your credit history and particularly your cash flow - may even requiring 1.5X or more in cash flow in relation to your monthly loan payment.

While many businesses (either start-up or established) do not like using personal loans or mixing personal financing with their business (which should be avoided for most standard business transaction) entrepreneurs must also understand that business loans are extremely hard to get - unless your business is so strong that it does not need outside financing in the first place (the "if you don't need it, you can have all you want" scenario).

But, if you have no other choice, then by all means use personal loans and build your business - until you no longer have to rely on them. Sometimes you just have to do what you have to do - as long as you believe in the outcome!