- No business plan required.
- Fast - decision is made on your credit score
- Sole proprietors are personally liable for any loan, so it doesn't matter what kind of loan they get.
- Your personal credit score is at risk.
- Using a personal line of credit for a corporation mixes personal and business assets. This could invalidate your corporate status. If you want to use a personal loan, it is best to use the person as a guarantor on a business loan. That way, you can keep personal and business assets separate.
- If a shareholder is using a personal loan to fund his/her initial shares of stock, the shareholder should pay back the personal loan; NOT the corporation. Think of how it works with Google stock. If you borrow money for 10 shares of Google stock, you pay the loan back - you don't expect Google to pay the loan for you.
- Use personal lines and loans for guaranteeing business debt. This keeps business and personal assets separate - which is a good business practice, and a requirement for corporations.