Do you guys think taking loans to start up a business is a good idea? For me I don't think so, I'm not the type of person that takes loans just to start a business as a matter of fact I hate everything that has to do with loans but sometimes we have no option but to take the loans, I have lots of questions to ask about taking to start the business of your dreams, my reason for disliking loans is because if you take loans to start the business if the business fails you have no other means of refunding that money back. If you want to start up a business I have some ways that might help you out. If you want to start up a business and you don't have enough the best thing to do is to take the loan from a friend or family members from people that won't put much pressure on you, me specifically I don't love anything that has to do with loans. That's all I can say about taking loans, for me I don't see taking loans as a good idea, I will like to hear your response on this. Thank you.
Taking a loan to start up a business, a good idea?
- Thread starter Immilash
- Start date
Mellorando
Banned
It is undoubtedly a risk to take a loan from the bank to fund a business but before doing so the risk must be thoroughly and deeply calculated.
Any form of business requires capital for start-up. Most start-up companies consider borrowing money for sustaining expenses needed for the business like purchasing for real estate, equipment, inventory, and increase your working capital. People in business would say that there may be reasons that are not valid to make you go into debt for your business. But there are still good reasons that prove to validate that borrowing money is still acceptable. If you think that your reasons are justifiable to have a loan, then you can take the step.
although I will give you three things to consider before accepting loan from the bank:
1. Accessibility and Convenience:
As a business owner, you do not want any of your time wasted. So when we talk about ease of access, a bank is readily approachable any time you need to talk to them and apply to borrow funds. Similarly, lending companies can easily be reached nowadays. For instance, if you are a business owner in Singapore and looking for a type of loan that you want for your business, there are many Money Lender Singapore based that loans to individuals and business owners. This would be an easier process unlike when you look for possible investors who would be interested to join and grow your business. Yes, it might take time for loan processing until its approval and release, but they are easier to handle compared to other alternative options.
2. Full Ownership of the Revenue:
Once you pay the bank for your loan, you are sure that the net income will be yours. You will be paying a fixed amount to the bank, and whatever the remaining amount will be part of your revenue. Unlike if you have an investor, the amount you pay can be accounted through the performance of your business, so if you have more income, your investor will likely demand a higher amount of return. If you want to expand your business, you can consider having a loan to be able to maximize the profits for yourself.
3. Requirements for Application:
Loan applications in banks follow certain rules and policies before approval. There is a risk that the requirements may not be met by the business. Before you apply for a loan, you can check out all the criteria needed by a bank for them to start processing a loan application. Not doing this, can waste much of your time and effort. If your application gets rejected, then you will be stressed with looking for alternatives to acquire for capital.
Any form of business requires capital for start-up. Most start-up companies consider borrowing money for sustaining expenses needed for the business like purchasing for real estate, equipment, inventory, and increase your working capital. People in business would say that there may be reasons that are not valid to make you go into debt for your business. But there are still good reasons that prove to validate that borrowing money is still acceptable. If you think that your reasons are justifiable to have a loan, then you can take the step.
although I will give you three things to consider before accepting loan from the bank:
1. Accessibility and Convenience:
As a business owner, you do not want any of your time wasted. So when we talk about ease of access, a bank is readily approachable any time you need to talk to them and apply to borrow funds. Similarly, lending companies can easily be reached nowadays. For instance, if you are a business owner in Singapore and looking for a type of loan that you want for your business, there are many Money Lender Singapore based that loans to individuals and business owners. This would be an easier process unlike when you look for possible investors who would be interested to join and grow your business. Yes, it might take time for loan processing until its approval and release, but they are easier to handle compared to other alternative options.
2. Full Ownership of the Revenue:
Once you pay the bank for your loan, you are sure that the net income will be yours. You will be paying a fixed amount to the bank, and whatever the remaining amount will be part of your revenue. Unlike if you have an investor, the amount you pay can be accounted through the performance of your business, so if you have more income, your investor will likely demand a higher amount of return. If you want to expand your business, you can consider having a loan to be able to maximize the profits for yourself.
3. Requirements for Application:
Loan applications in banks follow certain rules and policies before approval. There is a risk that the requirements may not be met by the business. Before you apply for a loan, you can check out all the criteria needed by a bank for them to start processing a loan application. Not doing this, can waste much of your time and effort. If your application gets rejected, then you will be stressed with looking for alternatives to acquire for capital.
Abigael
Valued Contributor
Taking a loan to start a business is not a good idea if you don't have a good plan for the business. You can't start a business just because other people are doing well in theres. You need to first have a good business idea, then look for a good location and a mentor to guide you on the do's and don'ts of running the business. Otherwise, it would really be best to have other sources of capital such as borrowing from friends and family or using your own savings and income. In fact, the latter is the safest way to fund your new business
Kingsley
Valued Contributor
Accessing loans should not be the first thing that should come to mind when we think of setup a business, infact there are some loan house as I will like to categorize them that will never give you any loan if they know you are going to use it for start up. And the reasons are very obvious how can you prove that you can manage the funds that will be given to you if you can not raise money on your own and start no matter how little it maybe, this will definitely one of the reasons they have at the back of their mind. Loans are very risky asset. I don't encourage start ups or starters to go for loans, this is because I believe they lack the requisite experience to manage a business. One will need prove him or herself first before thinking of accessing any loan. Giving a newbies loan is like giving a baby of 8months a bone to chew this will be highly impossible. Unless the child has come of age.
Rather than going around and sourcing loans to start big one can start small or borrow from friends and family, one can also partner with others.
Rather than going around and sourcing loans to start big one can start small or borrow from friends and family, one can also partner with others.
Richee84
Active member
Starting a business with a loan to me is not a very good idea, though we all know that to have a personal savings to start-upa business is quite difficult to achieve as our saving habit generally is very bad and not encouraging. Loan has it own advantages and also disadvantages on businesses, for a new business who use loan as it start-up capital, the pressure of paying back the loan will be too difficult for the business to cope with as there are other challenges that it tend to face at the initial stage of the business. Loan is more suitable for business expansion and to increase it growth. A business who has already been established and well know in the market or have a good market share can go for loan to expand its business, because the business is already in existed it will be very easy for the business to utilize the loan and to repay back such loan will not be difficult at all. For a new business, they tend to face different challenges in their early stage and there for adding another pressure to meet a loan repayment target will indeed not be a help to the business.
E
eldavis
Guest
Personally it is not a good idea and I would not even encourage anyone to take up a loan for their business. People take up loans to start up a business with the hopes that when they start earning or making profit they would pay back the loan easily. But what happens if the business does not go on as planned? Taking loans puts a person under pressure which could lead to taking or making wrong decisions.
btaliat
VIP Contributor
No matter how convinient the repayment of loans is, no matter how easy it is to access the loan from the bank and no matter how small the collateral is, loan is not a good source of fund for a business that's about to be started.
There are many cons of obtaining loan to start a business than the prons. An intending business owner needs to wegh the two sides before deciding which option is to go for
We should be aware that there is probability of not being able to repay the loan as a new business owner even if there is a solid feasibility study for the business.
There are some instances where a nascent business just collapse due to the outbreak of pandemic that is not even prepared for. Apart from the pandemic that can make sure the loan is somehow unpayable, there is always high interest that's associated with obtaining loan which make it difficult for the obtainee to focus more on the business rather he will face the success of his business.
There are many cons of obtaining loan to start a business than the prons. An intending business owner needs to wegh the two sides before deciding which option is to go for
We should be aware that there is probability of not being able to repay the loan as a new business owner even if there is a solid feasibility study for the business.
There are some instances where a nascent business just collapse due to the outbreak of pandemic that is not even prepared for. Apart from the pandemic that can make sure the loan is somehow unpayable, there is always high interest that's associated with obtaining loan which make it difficult for the obtainee to focus more on the business rather he will face the success of his business.
Kendy
Verified member
Taking out a loan to start a new business is actually dependent on some factors and I cannot totally overrule it by saying it is a bad choice or option but I would suggest and recommend that before taking a loan to start a new business you should have a back-up plan in case of unfathomable circumstances. There are so many people who made losses because they did not have a plan of repayment as at when due. Imagine during the Corona virus pandemic, prior to that time, I had obtained a loan to start a fruit business and the pandemic tilted in, which made the business futile and unprofitable. Albeit, this was more of an eye-opener to me that taking of loans in starting a new business is not always profitable but if it were to be an expanding business, definitely I would know how to minimise losses. It is always best to take loans that do not have high-yielding interest rates and also take little loans to add up to what you have so that the pressure would not be so enormous on the business. There are also some entrepreneurs who took up loans to set up a business and they were able to manage the challenges of making profits and repaying subsequently.
Oluwasegun purpose
Active member
It is a very bad ideal or bad decision to go and take a loan to Start up a business with it or even thinking about doing that it it is very bad it is advise able to do so because it causes a lot of damages in your business most people who partake in this act usually end up in the hands of debtors. The loan in which u went to take to start up a business just think about this question what is Capt, capital is the money which you use to start a business and taking about taking a loan to start a business that means that load stand as your capital that business is not going to end well so never try such even before taking a loan from anywhere you must get a colleteral to stand for you . I will advise people who want to start up a business who are thinking of talking a loan to start it I will advise you not to partake in such act why not looked for a job outside and do for a little time and be saving out of your salary with time you we see that you have already have enough money to start up your business of your choice... I will advise you not to try taking a loan to start a business
moonchild
VIP Contributor
Well, I used to say it's not advisable to take loan to start a business but I'll take back those words and advise you to go for it, but that comes with a rule of knowing what to do, before you take a loan to start up a business you should know exactly what you're doing that is, you should do your feasibility studies very well and make sure there's a demand for that business you're gunning for, I think if these are correct then you actually stand a chance to succeed in that business, the percentage for success is as high as 80%.
Because of that you can go ahead and get a loan to start it up because you have full assurance that it will work out, but if you did not do a feasibility studies is not advisable to just get a loan to start a business because it will eventually fail.
Business is not hard as it is painted if you're truly fulfilling a need, but when you start up a business or offering a service that no one needs then it will be very hard to scale and making money out of that type of business is not feasible.
Because of that you can go ahead and get a loan to start it up because you have full assurance that it will work out, but if you did not do a feasibility studies is not advisable to just get a loan to start a business because it will eventually fail.
Business is not hard as it is painted if you're truly fulfilling a need, but when you start up a business or offering a service that no one needs then it will be very hard to scale and making money out of that type of business is not feasible.
Similar threads
