Does taking a loan to start a business end well?

[Austinaldo]

Entrepreneurs are a very creative bunch. They are also resilient and tough. These are what makes them stand out in the society. But all these traits doesn't really help when you are faced with no capital to start your business. Having no capital, one is left with very few options; sell your property, ask favour from family and friends, seek for loans.

With loans you must consider how it might affect your business in the future. Most people take loans to finance many things like house, cars, etc. However taking a loan to finance your business comes with its very unique challenges.

Now I wonder what the public have to say about this scenario? If you have been in such a situation, I wonder how that might have worked for you?

Personally I do not encourage running a business with loans. I think it is a huge risk, one that has a possiblity of putting you in debt. I do not encourage taking loans especially if it is a new business and you're just starting out. This is business you should not use loan money to undergo this learning curve. Starting a business newly subjects us to a learning curve that the pressure from banks where you assessed these loans from would make you derail.

Banks do not care about your growth or anything. All they want is their money. Therefore you should not use loans especially the ones from a bank to finance a new business.

These are my opinion. I wonder what you think about it? Leave your comments below.

 

[Bard Racheal]

Anyone who embarks on a business, should have the capital of which he or she will build on for the business growth.

Having the capital for a business start-up is what's has been a setback for most business inclined aspirants.

But, if you do not have the capital of your own to start up, you won't be able to go on a progressive frequency you will definitely halt.

When it comes to taking loans to start up a business, (lol) this point is like a hook that is ever ready to hijack a big fish.

How?

Do not let taking loan to start a business ever cross your mind.

Because, the odds are unpredictable.
No one knows what may transpire after you've taken that loan, and have started already to materialize.

One or two ills may happen that will warrant you giving excuses on how you couldn't make it to pay back the loan at the set time, the time you and the other party fixed for the money to be refunded.

And there is likely to be interest piling up for you, of which you should be able to cover it all up, I mean try to raise the money up through the business you've started up.

Ouch.

 

[Jasz]

Loan is not totally bad, but there are saver alternatives. While taking loan it is normal to be scared at first , as fear is part of us, we only learn to control it so it doesn't cloud our judgement. But if you don't really know if the loan you are about take is worth it, this is totally dangerous except you mean to say , you don't know if you should acquire the loan.

If you don't have tangible reasons for taking the loan or if you think what you are about to use it for is not worth it, it is better you disembark. This is very risky as you might end up misusing the loan taken and end up putting yourself and family in trouble , thereby being so pathetic and sorry for yourself, you might end up losing all your assets too.

I will like you to ask yourself these questions carefully and as many times as possible. If you don't get reasonable answer after then, forget aboutttaking a loan.
1. Do you need a loan?
2 if yes what for?
3. Is it profitable?
4.is it feasible?
5. Can you keep up?
6. Do you still need a loan?

 

[Ithedicious]

A lot of people are taking a loan to start up a business of their choice and I do not see anything wrong with that , the reason is because even if you are getting a loan to start up a business, if you do not plan perfectly concerning the business then you are not likely to succeed because proper planning and preparation is what is needed to succeed in any area of business we are interested to start

Before we even think of getting a loan , we should just make adequate preparation concerning the area of business we have chosen and if everything is being done perfectly I don't even see any possibility of failure here.

The fact is that so many people are getting a loan to start up something and after getting this loan , they just go ahead to start of something that they don't understand , this can increase the risks of business failure because they are starting what they don't know how to handle.

Starting a business with a loan and not starting it with a loan does not have anything to do with the success of the business but how you can manage the business will determine its success.

 

[Bookwormlux]

It is important for us to be honest with ourselves and make it clear that this is not usually easy for a large percentage of people who are starting a business using loan as their source of funding .

Only a selected few are successful with money because through loan .

It is just so unfortunate, and I would rather advise people to try as much as possible to make sure that they acquire the necessary knowledge of how to make money and raise their own capital by themselves , and not to rely on some lending companies that would give them loans to go about their business .

The number one challeng that comes with starting a business with loan is in your being able to repay that loan .

Most of the times, you are more concerned about how you will be able to make some profit out of the money given to you, but we all know that this is not usually something that is not easy, because there are so many ways in which you tend to find it difficult in business and the profits would not continuously flow .

In situations like this , it is then going to be very difficult for you to effectively repay that loan and still maintain some level of profit making.

 

[sincerem]

It differs for everyone, some persons makes proper use of their time when they take loans, and make profit from the loan they took, and repay on time. Whereas some don't earn after taking a loan to start their business which makes it hard for them to repay the loan, and turns out to be a stumbling block in their career. That's why it is encouraging you start from saving, or taking funds from a VC to avoid feeling the pressure of repaying a loan. You can take a loan when you see that your business is flowing freely and generating steady profit. You can take a reasonable loan from the mortgage bank and improve your business further with low risk loan requirement.

I do take loan, especially when I got the reasons for it, and I take loan which I know I can repay without having issues of repaying it instead of taking a loan and not meeting up with the repayment. The consequences of taking a loan is unbearable especially when the repayment is over due. Those who borrowed from online loan app suffers more than they expected after failing to meet up with a loan repayment.

 

[Abigael]

Starting a business is really difficult if you do not have ready funds to be used as capital. You may have a good business idea but lack the capital to start it. So you look for sources such as selling your property, asking your family and friends for help or working for someone to earn the money.

If these sources don't give you the s finds you need, then the only option remaining is borrowing from the bank or other loan lending institutions with a plan of paying it back with interest. This is a big challenge because some of the interest rates are high and you risk getting caught up by the repayment date then the interest can be increased.

Moreover, loans can make you feel so much pressure and anxiety because you need to pay it back on time so that you don't get into any financial trouble. That will make you want to work really hard so that you can pay it back on time. That can cause you too much pressure.

But not all businesses that start with a loan end up failing. Some of them actually thrive well and are able to pay back the loan and continue growing big.

 

[SANIA]

In my opinion, taking loans from bank is not something I will use.
I maybe can take loan from the company at which I am working so I can pay this loan back with my deduction In salary each month.
It is more safe that way so I know that if my new business takes time to build up and to make profit I can still repay this loan back to the company.
This is something that is preferable than just starting a new business with pan from bank and then live in fear of paying that debt and going bankrupt in this business and then living in debt for a long time.
Maybe there are some people who will take huge risks but I am not one of them.
I try to play it the safer way.
I take risks but in a more safe way so I donot have to be in a bankrupt situation actually.
So people are different.
I suggest everyone to just be careful with such risks and always have a backup plan always in order to avoid trouble in the future.
I want everyone to make smart decisions and not rational decision with greed of money.
I wish everyone all the best with their businesses.

 

[Chibson]

Like someone has stated up there, there are some people that take loans to start businesses and they succeed on it but there are also many people that they close to start businesses and they end up going into bad debt.

Personally I wouldn't advise anyone to take a loan in order to venture into a business because it carries a lot of risks on the long run especially when you are a newbie in business line.

A lot of people are always in a hurry to start big businesses that they do not have proper knowledge and understanding of how to run. I always advise people to start small and from there they can gather a lot of ideas and knowledge of how to make their business successful.

If you start small and you are able to grow it to a reasonable extent then you can now request for loans from banks or any other means to expand your business because you already have proper knowledge and understanding of how to run a successful business. There is a high possibility that such a business will probably succeed. If you are new to business and you're taking a loan you will be under pressure to make profit which is not good for your new business.

 

[Augusta]

Well for me whether it will end well or not I wouldn't advise anyone to start a business with a loan. The thing with business is that you can't predict it's outcome so you don't need to gamble with loans or any kind of borrowing when you are not sure that the business will go as planned.

I'm writing this because it will be very frustrating for you if you failed and you start thinking of how you would repay ones money out of the blues. With this you would not only be dealing with the failure of the business but with the need to pay back the loan

I always advised that one look out for other means that wouldn't need one pay back the money almost immediately or at all. You can look for an angel investor or asked for assistance from family and friends no matter how small ,startfrom there and apply patience.

The policy with banks now with my home country is that they do not give loans to new businesses and their points are valid, you shouldn't be using a loan with high interest to start a business you might be starting on a wrong footing and you might just fail at it.

 

[btaliat]

Loan can be good or bad depending on the person that obtains it. There are people that always utilize the good usage of the obtained loans. They make sure they acount for every dime that they obtain. While there are some people that do have solid reasons for obtaining loan before they do.

The first thing to know is to really be convinced if there is need for the loan. We should not just see loan as the last option. There should be adequate utilisation of other options apart from obtaining loan. If they didn't work, that's when loan should be used as the last resort.

There should be strong conviction that the project to use the money for is very viable and feasible, if not, there should not be the reason for obtaining loan. I do see some people that do take loan to invest in ponzi business or some business that do not really have future. Not only will they lose their interest and capital, they will also be indebted.

If the business is viable, then there should be provision for the repayment of the loan. There should be allowed ways of repaying the loan. This will reduce the chace of being indebted.

 

[Setho]

There has been a lot of talk about why and why not people should be able to access loans in order to start a business and the advantages and disadvantages as well . I believe that this is something that is a two-way thing . This means that people should always look for ways in which they can be able to get the required capital to start their business outside of financial loans but if they do not have that then they are absolutely left with no option than to take the loans that commercial banks are offering them .

There is absolutely nothing guaranteed in business even if you are going to be starting the business with money that you have saved and as such even if you are taking a loan then the business can be able to go either way .

This is why it is advisable that you should do your own proper research and field experiments to ensure that you are having a chance for success before trying to secure funding .

There are also financial loans in a lot of countries that have been tailored to protect small businesses in such a way that when it progressing they can be able to let go of the interest.

 

[Sotherefore]

There's nothing wrong with that because it will depend on how you plan your business and also the type of business you are starting with this loan .

Let me tell you something , two people can start up the same business probably in different location after their own personal research. One might experience failure while the other one might succeed in the business , the reason why the other one is failing and the other one is succeeding is because of how they manage or organise their business.

Some people may not really know how to organise the business or carry out a proper research on so many things before arriving at a business plan and location and this can be very dangerous because in most cases it might likely leads to business failure

lf you are interested to get a loan to start up anything , you just have to carry out your own personal research on the type of business you are interested to start if the business will be profitable. After carrying out your own personal research you can then arrive in a good business and also in good location. That's the only thing that could help you.

 

[Oluwasegun purpose]

Getting a loan to start up a business is a very bad ideal because that loan stand as your capital.....
a lot of business owner find it very difficult to raise little amount of money to start up a business....
I personally,I can never advice you to take a loan to start up a business with it , instead of you taking that loan why not look for a little amount of money matter how small that may be it you can still use it to start up a business and that business will grow very fast but using a loan to start up a business that business will not end well it will end up in the hands of debt....
even presently in this kind of situation we have in this country it is very difficult to find were to broww money without colleteral ,if you don't have colleteral or guarantor to stand for you they can never approved a loan for you...
that's is why you need to learn the habit of savings for example if you have some savings in your bank account or anywhere else you can never find it too difficult to start up a business.... using a loan to start a business don't even expect any profit from that business instead be expecting loss ...
Additionally,I will advise you not to start a business with a loan business that money stand as your capital.......

 

[soxcryp]

If you have the right advice and the business is profitable, maybe yes. But in general, it is always more advisable to start with your own funds, even if they are few, in case things do not go well, they cannot get worse because you have a debt to pay without knowing how.

 

[Carpon]

The answer I will give to this thread will be conditional. I won't just conclude that you won't be able to do great things when you begin a business with loaned capital and even business experts have included loan collection as one of the ways to generate capital for business.

So actually there are a lot of advantages that this has especially if the such a person is a wise and knowledgeable business person.

Once you get a loan and you are able to use it in the business judiciously, then you will discover enough profit and generate a lot that can possibly cover for the amount you initially collected as loan and this helps you stabilize your finances.

But once you are not able to make use of it wisely, then it will be to your detriment and if you are not sure that you will use your funds productively, it is better you don't get them.

 

[Etini]

I won't advocate that one should take a loan to start a business. I would to a reasonable extent support someone taking a loan to expand an already existing business. This is because the start of a business is plagued with lots of risks and challenges that might cause the business to fail at the initial stage.

I have seen so many people that took loans to start businesses and a vast majority of them did not end well. Only very few were able to break even. Remebrmer every loan comes with an interest. That interest might have been your plough-back profit that could have been used to expand the business. My take is always this- save some money and start the business at any level. Understand what that particular business entails, and run it for some time before you go get a loan. By so doing, you would minimize the risks and pressure associated with loans.

 

[Alhamdu]

Actually, it is good to have a good reason for getting a loan and I won't say it's unadvisable. But I will like to say that this should be considered when there are no other options available.

Getting a loan actually kind of puts you in some financial bondage so to say on a personal basis

But your ability to use the loaned funds wisely may be what will matter the most in this kind of situation. When you do not use the money judiciously, you put yourself in a very serious financial problem.

 

[Yusra3]

Using debt as a business start-up options only turns out in the profit mega-million if the business is run in good way. Loans are an important source of funding for a number of great start-ups without individual shareholders giving up early control. While having extra debt is risky it does not give positive results if the sales and money income turns out to be lower than expected. Shape of credit in idea is prompted by affordability of repayment. Consult with professional experts to develop cash flow projections and structuring loans over longer periods at a low-cost interest rate. Think of other modes like crowdfunding and angel investors as well. The runway for a great startup begins when all the above elements are put together during the planning stage by showing discipline in making good investments and standard sales operations.