How to Use a Personal Loan for Side Hustle Startups

Priya, a 29-year-old software engineer in Hyderabad, has a dream of starting her own baking business. To make it happen, she requires ₹ 3,00,000 for a commercial oven, workspace rental, and branding setup.

With her savings falling short, she opts for a personal loan in Hyderabad, which provides her with quick, flexible funding to kickstart her venture.

Did you know? The personal loan market has been growing, with the total personal loan balances reaching a record ₹ 52.7 lakh crore in February 2024.

If Priya takes a loan of ₹ 3,00,000 at an interest rate of 12% per annum for three years, her EMI will be approximately ₹10,000. This makes it easier to manage her monthly cash flow while her business grows.

Why Consider a Personal Loan for Your Side Hustle?

Starting a side hustle without funds feels impossible. That’s where personal loans step in. With a personal loan in Hyderabad, you get quick funds without restrictions on how you use them.

Here’s why it’s a good idea:

• Speed: Most personal loans are approved within days.
• Flexibility: Use the funds for anything: inventory, marketing, or technology.
• No Collateral: Unlike business loans, personal loans don’t require security.

For instance, if you plan to sell handmade jewellery, you might need ₹2,50,000 to buy tools and raw materials. Without a personal loan, saving this amount could take years!

What Can a Personal Loan Cover?

Here’s a breakdown of common expenses funded by personal loans:

For example, Priya spent ₹1,50,000 on her oven and ₹50,000 on social media ads. These initial investments set the stage for her business success.

Things to Consider Before Applying

Before you rush into a loan, as overborrowing, consider asking yourself the following questions:

• How much do I need? Over-borrowing increases your financial stress.
• What’s my repayment capacity? Calculate your EMI beforehand.

Example: For a loan of ₹2,00,000 at 11% interest for two years, your EMI would be about ₹9,345.

Here are practical tips to keep in mind:

1. Compare interest rates across lenders.
2. Check your credit score; it affects your eligibility.
3. Read the fine print for hidden charges like processing fees.
4. Ensure your side hustle can cover monthly payments within six months.

Benefits of a Personal Loan for Side Hustles

1. Freedom to Use: Unlike traditional business loans, there’s no need to justify expenses.
2. Predictable Payments: Fixed EMIs help you plan your finances better.
3. Credit Score Boost: Timely payments improve your credit history.

For instance, Priya uses a personal loan in Hyderabad to fund her business. Her timely EMI payments also build her credit score, which helps her secure a larger business loan later.

Alternatives to Personal Loans

Not sure if a personal loan is right for you? Consider these options:

• 0% APR Credit Cards: Best for short-term needs under ₹1,00,000.
• Crowdfunding: Ideal if your business idea has a community appeal.
• Grants or subsidies: Explore government startup schemes in India.

Why Side Hustles Are a Good Choice in 2025?

Side hustles allow you to earn extra income on your schedule, often with minimal startup costs. With the rise of the digital economy, anyone with a laptop, smartphone, or a bit of creativity can start a side hustle today.

Take Ramesh, a Hyderabad-based photographer. He needed ₹2,00,000 for a professional camera and lighting equipment. With a personal loan, he upgraded his tools and started earning ₹50,000 a month in three months.

Similarly, Shruti took ₹1,00,000 to start her online clothing store. She used ₹40,000 for inventory and ₹20,000 for her website. Within six months, her revenue tripled!

Conclusion

A personal loan can be a solution for your side hustle. With proper planning, it bridges the gap between your dream and reality. If you need ₹1,00,000 or ₹3,00,000, ensure your repayments align with your business growth.

So, ready to start your journey? Explore personal loan in Hyderabad options today and transform your passion into profit!

FAQs

1. What’s the maximum amount I can borrow through a personal loan in Hyderabad?
   You can borrow up to ₹25,00,000, depending on your credit score and income.
2. How long does it take to get a personal loan?
   It usually takes 1-2 days if your documents are in order.
3. What’s the average interest rate for personal loans in Hyderabad?
   Depending on the lender, rates typically range from 10% to 16%.
4. Can I repay the loan early to save on interest?
   Yes, most lenders allow prepayment but may charge a small penalty.