How to Help Your Side Hustle Succeed With a Low-Interest Personal Loan

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low-interest personal loans

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What would you do with extra money each month? Pay down your debt? Plan a vacation? Joining the more than 44 million Americans who have side hustles could provide you with a way to reach your financial goals. But how do you get started?

“Some side hustles require an upfront investment,” said Gerri Detweiler, education director at business credit and financing company Nav. “While it’s ideal to start a business debt-free, that’s not always realistic.”

Detweiler said applying for low-interest personal loans could be one way to get your business funding off the ground.

What are personal loans?

Personal loans are unsecured, meaning you don’t need collateral to qualify. They come in different forms. You can get low-interest personal loans from:

  • Banks or credit unions
  • Peer-to-peer lenders
  • Fintech companies that specialize in personal loans

When you get creative, you might be surprised at the options you have for getting a personal loan for your business startup.

The interest rate on a personal loan to start a business can vary depending on the company and your credit. WenFang Bruchett, who teaches entrepreneurs how to fund their startups at BlissFinance, pointed out that you have to be careful about where you get your personal loan funding. Fast finance companies that make it easy to get a loan might charge higher interest rates.

“It’s easy to get that kind of loan, and you don’t need to have great credit,” said Bruchett. “But the interest rate is very expensive, often in the double digits.”

When you’re starting a business, it’s better to qualify for a small low-interest personal loan, said Detweiler. Payments are more manageable, and as the business grows, it’s easier to pay off a loan with a lower interest rate.

Advantages of low-interest personal loans

“Personal loans are a lot easier to get than small-business loans, which can be hard to get as a startup,” said Detweiler.

Not only is it possible to get the funding you need faster, but you also can rely on your personal credit score. If you have good credit, you should be able to get a decent interest rate.

Lou Haverty has been involved in buying and selling websites as a side hustle and is the founder of financial education website Financial Analyst Insider. He likes using peer-to-peer sites, such as LendingClub, to fund business ideas.

Haverty pointed out that you don’t need collateral for personal loans, so you aren’t putting a valuable asset, such as your home or savings account, at risk.

“You also get access to small loans at a relatively competitive interest rate, especially compared to credit cards,” Haverty said.

On top of that, a personal loan for a business startup is less likely to have a big, damaging impact on your credit score, provided you use it carefully.

“High balances on personal credit cards can result in high credit utilization, which can lower your scores,” said Detweiler. “That’s usually not an issue with personal loans, which are installment loans, because usage isn’t a factor the way it is with credit cards.”

Disadvantages of using personal loans to fund a side hustle

Detweiler said using personal loans to fund your side hustle can be a double-edged sword. Even though you can use your personal credit to get faster funding and a good rate, you’re also putting your rating at risk.

While you don’t need to worry much about your credit utilization ratio, you do need to make sure you pay on time. Missed payments on your personal loans can be a huge drag on your credit score.

“Another downside is that if your business fails, your loan payments may be a painful and expensive reminder,” said Detweiler. “Keep borrowing to a minimum if possible — at least until you have [proved] your business concept.”

If you don’t have good credit, using a personal loan to fund your side hustle might not make a lot of sense. There are personal business loans for bad credit, but they might not be beneficial. Without the low rate that comes with excellent credit, you could be stuck paying high interest, said Bruchett, and your payments could become unaffordable.

Use collateral without putting your house at risk

If you can’t get your best rates on personal loans, Bruchett suggested looking at ways to get funding using collateral. You don’t have to turn to a home equity loan, though.

Some banks and credit unions will provide you with low-interest funding if you have a savings account or certificate of deposit (CD). “Pledge the funds as collateral, and the entire process can take less than an hour,” said Bruchett. “The interest rate can be as low as 2.00% above your CD or savings rate.”

Bruchett also pointed out that some lenders will let you use your brokerage account as collateral. “You can continue to trade and make money without depleting your portfolio,” she said.

However, the major downside to using collateral is that you could lose it if something goes wrong and you can’t make payments on your loan. As a result, said Haverty, it’s preferable to use unsecured personal loans to fund your side hustle whenever it’s practical.

How to get a personal loan for your side hustle

If you decide low-interest personal loans are a good fit for you, here’s how to get started:

  1. Know your credit. The first step is to check your credit score. You can use a consumer credit site to see where you stand or look at your most recent credit card statement. Don’t forget to go to and look through your credit report for errors. If you find mistakes, contact the credit reporting agency and creditor to have them fixed. You don’t want to be denied a low-cost loan because of an inaccuracy in your history.
  2. Compare personal loan options. Look at personal loan terms from different lenders. Consider interest rates and repayment options to find a loan that works best for your situation.
  3. Prepare your documentation. Most lenders require the same information. That means you’ll need your Social Security number, personal details (name, address, birthdate), driver’s license number, and proof of income (usually pay stubs or tax returns).
  4. Fill out the personal loan application. Technology makes it easy to fill out applications online. You usually can upload PDFs of your income documentation and scanned images of your driver’s license. You might not even need to go anywhere to sign the paperwork. As long as the lender has your banking information, it can deposit the money into your account — sometimes in a few business days.

After you have your loan

Once you have your personal loan, it’s important that you pay on time and work hard to make your business profitable as quickly as possible.

“After you’ve established your business, you can then apply for a business credit card or business loan,” said Detweiler. “These won’t affect your personal credit scores.”

In the end, low-interest personal loans are great for helping you get started, but the long-term goal is to build a business or side hustle that stands on its own two feet.

Interested in a personal loan?

Here are the top personal loan lenders of 2020!
LenderAPR RangeLoan Amount 
5.99% – 19.16%1$5,000 - $100,000

Visit SoFi

7.98% – 35.99%$1,000 - $50,000

Visit Upstart

7.99% – 35.97%*$1,000 - $35,000

Visit Upgrade

99.00% – 199.00%2$500 - $4,000

Visit OppLoans

5.99% – 24.99%3$5,000 - $35,000

Visit Payoff

7.99% – 29.99%4$7,500 - $40,000

Visit FreedomPlus

7.99% – 20.88%5$5,000 - $50,000

Visit Citizens

15.49% – 35.99%6$2,000 - $25,000

Visit LendingPoint

10.68% – 35.89%7$1,000 - $40,000

Visit LendingClub

9.95% – 35.99%8$2,000 - $35,000

Visit Avant

1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.82% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.


    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Rates and offer subject to change. All accounts, loans and services subject to individual approval.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

6 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

7 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 9.56% and a 5.00% origination fee of $300 for an APR of 13.11%. In this example, you will receive $5,700 and will make 36 monthly payments of $192.37. The total amount repayable will be $6,925.32. Your APR will be determined based on your credit at time of application. The origination fee ranges from 2% to 6% (average is 4.86% as of 7/1/2019 – 9/30/2019). In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,001 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the website. All loans via LendingClub have a minimum repayment term of 36 months or longer.

8 Important Disclosures for Avant.

Avant Disclosures

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Based on the responses from 7,302 customers in a survey of 140,258 newly funded customers, conducted from August 1, 2018 – August 1, 2019, 95.11% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at