Consequences of using credit facility to run a business.

[Folaham]

I

Using credit facilities like obtaining loan from cooperative may have negative or positive impacts. The negative impact includes if the business fails to succeed, the loan may become difficult to repay while the positive impact includes it will make us work harder in order to repay the loan.
Do you agree with my assertions or you have another opinion?

Agree in totality with you. Also when we are using credit facilities to finance our business we should be very careful of over investing in fixed assets.
If the business fail as you noted, do we have the ability to recover from a major business interruption without going through another loan option

 

[Divulgence]

Credit facilities are utilized broadly across the financial market as a way to provide funding for different purposes Companies frequently implement a credit facility in conjunction with closing a round of equity financing or raising money by selling shares of its stock. A key consideration for any company is how it will incorporate debt in its capital structure while considering the parameters of its equity financing.

The company may take out a credit facility based on collateral that may be sold or substituted without altering the terms of the original contract. The facility may apply to different projects or departments in the business and be distributed at the company’s discretion. The time period for repaying the loan is flexible and like other loans, depends on the credit situation of the business and how well they have paid off debts in the past.

 

[Taiwoayan]

Nothing bad in using credit to run a business if it's utilize very well. Most companies operate on loan's

 

[Highflyer]

Using a loan or any other credit facility to start your business can be disastrous, when the business crashes or doesn't turn out as you expected, you lose every form of hope you thought you would pay back. You lose your collateral too.

 

[eenya001]

For me the negative outweighs the positive in taking loans to start any business venture. You can't authoritatively predict for a fact if the business would be fruitful or not, you are only advise to take a loan when it is on a stage to to move your business to the next level.

 

[Kamon c4]

Well I do not fully agree with you. There’s nothing bad in using loans to finance your business. In fact, loan is one if the best way to source for capital. Most people won’t agree with me cause of the interest rate but what would be the gain of the loaner? From my own point of view, loan will ginger you into doing better in your busines

 

[Lyrrex]

My own opinion is that it is better to start up a business with your own funds no matter if you have to start small. However, when the business is now on solid footing with customers and generating profits, you can take a low interest loan for the sake of expansion.

 

[Khezo]

Getting a loan to start a business is really not a good thing as this would disturb you later. Getting a loan should be the last thing one would do to start a business. Its better to ask family and friends or the money
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Getting a loan to start a business is really not a good thing as this would disturb you later. Getting a loan should be the last thing one would do to start a business. Its better to ask family and friends or the money
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Getting a loan to start a business is really not a good thing as this would disturb you later. Getting a loan should be the last thing one would do to start a business. Its better to ask family and friends or the money

 

[Kingsley]

Consequences of using a credit facility is includes not been able to pay back and losing all the business to the creditor and it might also bring about so so his or her profit to the payment of interest of loan.

 

[unhappy triad]

My issue with using a credit line for funding the business is the pressure on the payments. There is a minimum monthly installment and the smaller the monthly that you pay the bigger the interest that is charged on your loan. The best way to operate a business is to be financially independent by having your own mon

Yes, you're right.
Thats the reason why it is advisable for people to start with any other means than loans, especially businesses without a backup plan. Loans are not easy to pay because it will keep increasing with interest if payments are not made in time.
The thought of having some debts to pay off may also prompt the business owner to work harder too.

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My issue with using a credit line for funding the business is the pressure on the payments. There is a minimum monthly installment and the smaller the monthly that you pay the bigger the interest that is charged on your loan. The best way to operate a business is to be financially independent by having your own mon

Yes, you're right.
Thats the reason why it is advisable for people to start with any other means than loans, especially businesses without a backup plan. Loans are not easy to pay because it will keep increasing with interest if payments are not made in time.
The thought of having some debts to pay off may also prompt the business owner to work harder too.

 

[Godleads1]

This discussion has reoccurred times without number. The same answer is what I will give. Do not start up a business with an entire loan because it has side effects on the business when it's meant to be paid.

 

[eojo2401]

Before you decide to use credit facilities to run a business, look at the term and conditions of such credit facilities very well in other not to run into troubles. There are some loans that there interest will kill your business and send you back to square one.
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Before you decide to use credit facilities to run a business, look at the term and conditions of such credit facilities very well in other not to run into troubles. There are some loans that there interest will kill your business and send you back to square one.
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Before you decide to use credit facilities to run a business, look at the term and conditions of such credit facilities very well in other not to run into troubles. There are some loans that there interest will kill your business and send you back to square one.

 

[Trojan8]

I definitely won't advice anyone to start a business with money gotten from credit facilities. There are a lot of draw backs with using loans to finance businesses. For one you will have to start paying back the loan in most cases the business is still too young to carry such burden. This often leads to the dearth of the business and then resulting in more debts.

 

[Eodine]

Because money is important in starting a business and running the operations from day to day is why credit facilities are required so you can meet the need, if a business starts on credit, then there would be plans so as to avoid tension, stress etc.

 

[Tariq Nazir]

Credit facility to operate a business is not a problem as long as you are able to maintain profit at the end of the day it's only businessman I cannot believe it the richest man in Africa become the richest man in the world uses his bank money as business capital

 

[gbadebo9]

Without credit facilities it will be so difficult to flourished in someone business. But mind u if I want access to facilities u nerd to be circumspect in ur pursue of the credit. In commercial Bank the interest rate is outrageous that if care is not taken u might run into problem and that might lead problem.

 

[Ridorz]

Firstly, it's not advisable to start a business with loan, but you can boost your business with loan. What I mean is that as a business beginner the best best thing is to start Business with your little capital you have, and later when you have balance on the business then you can get loan to enlarge it.

 

[singlej007]

It is true, you either come out successful or you fail, but taking a loan to start up a business is not really advisable, but one could start with the little he or she has save and when you see your business is really moving and need expansion then you can take loan.

 

[Abelcairo43]

Running a business on loan can be frustrating at times especially when business is not moving well. Also, the debtor is always a slave to the creditor. I would advise anyone going into business to atleast have like 80% cash and sort out for the 20% as loan; by then the pressure will be reduced.

 

[unhappy triad]

Using credit facilities is not all that bad idea especially if the business you have yields enough returns to cover for daily runs. One may say it's better to have ones own. True but then resource and capital is not unlimited. One may use this sometimes