Personal Loan vs Business Loan: Which One Should You Choose?

Personal Loan vs Business Loan: Which One Should You Choose?

A personal loan can fund eligible personal expenses, while a business loan is designed for business-related requirements such as working capital, expansion and equipment.
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Last reviewed: September 2026


In Summary

The choice between a personal loan and a business loan depends mainly on how you plan to use the funds and your eligibility profile.


  • A personal loan is intended for eligible personal expenses.
  • A business loan is designed for business-related expenses.
  • Bajaj Finance Personal Loan offers Rs. 40,000 to Rs. 55 lakh, subject to eligibility.
  • Bajaj Finance Business Loan offers Rs. 2 lakh to Rs. 80 lakh, subject to eligibility.
  • Personal Loan tenure ranges from 12 months to 108 months.
  • Business Loan tenure ranges from 12 to 96 months.
  • Both products can be available without collateral, subject to applicable terms.

If the expense is personal, compare a Personal Loan. If the funds are for your business, compare a Business Loan based on the amount, tenure, cost and documentation applicable to you. You can check your eligibility using only your mobile number and OTP, without visiting a branch.

What is the difference between a personal loan and a business loan?

The main difference is the purpose of borrowing. A personal loan is intended for eligible personal requirements, while a business loan is designed to fund business needs.

FactorPersonal LoanBusiness Loan
Primary purposePersonal expensesBusiness expenses
Eligible profileSalaried or self-employedSelf-employed
Loan amountRs. 40,000 to Rs. 55 lakhRs. 2 lakh to Rs. 80 lakh
Tenure12 months to 108 months12 to 96 months
CollateralNot required, subject to applicable termsNot required, subject to applicable terms
Minimum CIBIL Score650 650
Business vintageNot a basic requirement for salaried applicantsMinimum 3 years
DocumentationKYC, PAN, income and employment documents, as applicableKYC, PAN, proof of business ownership and additional financial documents, as applicable

Bajaj Finance states that its Personal Loan is available to salaried and self-employed applicants, while its Business Loan is for self-employed applicants meeting the applicable criteria.

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When should you consider a personal loan?

Consider a Personal Loan when you need funds for an eligible personal expense rather than a business requirement. Examples include medical expenses, education, weddings, travel or home renovation.


You can apply as a salaried or self-employed individual if you meet the applicable eligibility criteria. Bajaj Finance Personal Loan has a loan range of Rs. 40,000 to Rs. 55 lakh and tenure options from 12 months to 108 months.


A personal loan can also be relevant if you are self-employed but the expense is personal rather than related to your business.

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When should you consider a business loan?

Consider a Business Loan when you need funds for business-related requirements such as working capital, expansion, equipment or technology upgrades.


Bajaj Finance Business Loan is available to eligible self-employed applicants with a minimum business vintage of 3 years. The stated loan amount is Rs. 2 lakh to Rs. 80 lakh, with tenure options from 12 to 96 months.


The business purpose and supporting documents form part of the application assessment. Proof of business ownership and additional financial documents can be required.

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How does eligibility differ?

Personal Loan eligibility is based on your personal and financial profile. Bajaj Finance lists Indian nationality, age of 21 years to 80 years at loan maturity, employment with a public, private or MNC company, CIBIL Score of 650 or higher, and salaried or self-employed status as basic criteria.


Business Loan eligibility has a business-specific requirement. Bajaj Finance lists Indian nationality, self-employed status, a minimum business vintage of 3 years and a CIBIL Score of 650 or higher.


Eligibility factorPersonal LoanBusiness Loan
Indian nationalityRequiredRequired
Age21 years to 80 years at maturity21–80 years at maturity
Salaried applicantsEligibleNot applicable
Self-employed applicantsEligibleEligible
CIBIL Score650 or higher650 or higher
Business vintageNot applicable as a basic criterion for salaried applicantsMinimum 3 years

Meeting the basic criteria does not guarantee approval or a particular loan amount.

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Personal Loan vs Business Loan: Which factors should you compare?

Compare the following factors before selecting a loan:


FactorWhat you should check
PurposePersonal expense or business requirement
AmountMinimum and maximum amount available
EligibilityIncome, CIBIL Score, age and business criteria
Interest rateRate applicable to your profile
FeesProcessing and other applicable charges
TenureMonthly EMI and total repayment
DocumentationPersonal, income or business documents required
RepaymentEMI obligation and prepayment terms
CollateralWhether security is required
Cash flowWhether you can comfortably meet the EMI

The purpose should be your first filter. Cost and repayment capacity should then guide the comparison.

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How can you choose between a personal loan and business loan?

Choose between a Personal Loan and Business Loan based on how you plan to use the funds and which eligibility criteria you meet.


  • Personal expenses: A Personal Loan may be suitable for expenses such as medical treatment, education, travel or a wedding.
  • Business expansion: A Business Loan may be suitable for expanding operations, opening a new location or increasing business capacity.
  • Business working capital: A Business Loan may help meet eligible business expenses such as inventory or operational costs.
  • Business equipment: A Business Loan may be considered for eligible equipment or machinery purchases.
  • Self-employed with a personal requirement: A Personal Loan may be considered if you meet the applicable personal loan criteria.
  • Self-employed with a business requirement: A Business Loan may be considered if you meet the applicable business loan criteria.

Before choosing a loan, check the eligible purpose, loan amount, interest rate, repayment tenure, fees and other applicable terms. Do not use a loan for a purpose excluded under its terms.

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What should you check before taking either loan?

Calculate the total borrowing cost before accepting an offer. Your comparison should include the interest rate, processing fee, EMI, tenure and total repayment.


Also check your existing EMIs and monthly commitments. A loan that fits your required amount can still strain your budget if the EMI leaves insufficient room for regular expenses or emergencies.


For a business loan, also assess whether the expected business cash flow can support the repayment.

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Key offerings: 3 loan types

  • Flexi Hybrid Loan
  • Flexi Dropline Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 36 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of interest per annum

10% to 30.5% p.a.

Processing fees

Up to 4.13% of the loan amount (inclusive of applicable taxes).

Flexi Facility Charge

Term Loan – Not applicable

Flexi Loans –Up To Rs 1,999 To Up To Rs 18,999/- (Inclusive Of Applicable Taxes)

Will be deducted upfront from loan amount.

Bounce charges

Rs. 700 to Rs. 1,200/- per bounce

“Bounce charges” shall mean charges for (i) dishonor of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonor of payment mandate or non-registration of the payment mandate or any other reason.

Part-prepayment charges

Full Pre-payment:

  • Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment

  • Flexi Term (Dropline) Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

  • Flexi Hybrid Term Loan: Up to 4.72% (Inclusive of applicable taxes) on the outstanding loan amount, as on the date of full prepayment.

Part Pre-payment

  • Up to 4.72% (Inclusive of applicable taxes) of the principal amount of Loan prepaid on the date of such part Pre-Payment.

  • Not Applicable for Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan.

Penal charge

Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state)

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges

Term Loan: Not applicable

Flexi Term (Dropline) Loan:

Up to 0.295% (Inclusive of applicable taxes) of the Dropline limit (as per the repayment schedule) on the date of levy of such charges.


Flexi Hybrid Term Loan:

Up to 0.472% (Inclusive Of Applicable Taxes) Of The Dropline Limit During Initial Tenure. Up to 0.295% (Inclusive Of Applicable Taxes) Of Dropline Limit During Subsequent Tenure

Credit guarantee scheme feeUp to 1.18% p.a. (pro-rated daily till 31st March) (inclusive of all applicable taxes) of the loan amount
Credit guarantee scheme renewal feeUp to 1.18% p.a. (inclusive of all applicable taxes) on the outstanding loan amount as on April 01 of the subsequent Financial Year.
*Renewal Fee to be collected only for 3 subsequent financial years.
 
**If the Remaining Tenure is less than 12 months, the CG Fee in subsequent years shall be charged prorated.

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Frequently asked questions

Overview

How much funding can you get with a Personal Loan?

With a Bajaj Finance Personal Loan, you can get funds from Rs. 40,000 to Rs. 55 lakh. Check your eligibility for personal loan using just mobile number and OTP – 100% online process.

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Disclaimer

Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.
For customer support, call Personal Loan IVR: 7757 000 000