Consequences of using credit facility to run a business.

[Philip Omotayo]

Credit facility to start a business is not advisable at all. You don't really know the outcome of the business you are gojng into yet. Then, not only that, credit could accumulate overtime if the paying back is not met. Also having to acquire a place on credit could also nt be a good idea.

 

[Atiqurrehman]

Personal Accountability. ...
Data from the Credit Bureau. ...
Protections of the CARD Act are Minimal. ...
Still liable (in certain circumstances) for employee cards...
APRs aren't that poor.

 

[Diamond07]

When you begin selling to customers on credit, your cash flow will be immediately affected. For example, if you begin to offer credit terms for 30 days, the cash that you would normally receive during this time will disappear. You will not have this cash to pay your bills, employee and suppliers.

 

[Damismiling]

Starting a business on loan or running a business with credit is not really advisable for a starter, if it is for expansion it is still fine but for a starter you will be disturb, You will loose concentration and you might not be emotional stable to run the business

 

[Marfav]

Especially when you don't have an idea about the specific business you want to start, it's not advisable to get a loan to start a business because it might not turn out the way you planned it. My view is that starting a company with your funds is easier, regardless of whether you have to start small.

 

[Donolatunji]

As financial conditions worsen, the amount of loans that a bank is able to make decreases. In addition, deteriorating market conditions can cause laws requiring banks to keep more cash in reserve to ensure that they have enough funds to pay their liabilities.

 

[Anymore]

The consequences of using credit facility to run business to some extent as a negative result, because most credit facility are are as result of loanthe and loss nowadays have overwhelming interest rate, that could comfortably claim the profit and even the capital of any business the credit was intended to develop.

 

[Kelvin7656]

A credit facility is a type of loan made in a business or corporate finance context. It allows the borrowing business to take out money over an extended period of time rather than reapplying for a loan each time it needs money. In effect, a credit facility lets a company take out an umbrella loan for generating capital over an extended period of time.

 

[Nicklas22]

It's very bad to start business with a loan because not all business start well, so if your business doesn't start well you will end up in debt which will slow Down the process of your business
It's better to save enough money and use it to start your business

 

[kayode10]

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?

It takes a great risk to run your business with credit facilities which obtained from cooperative society. The problem with most people is that they obtain loan to facilitate a business they don't have in-depth idea about. Also don't use credit facility to run a business that will not be bringing income everyday. And all this makes it pretty hard to me pay back the loan hence close your of the business.

 

[abubakar3141]

When selling on credit, there is a chance that the customer will go bankrupt and fail to pay you. The company will lose revenue. The company will also have to write off the debt as bad debt.

 

[Abiodun omolayo]

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.

I would never advice anybody I know to start a business on loan or credit, because loans are very difficult to pay, it will drift your attention to how to refund back and you are not stable to control and make proper decision for the business

 

[Aricha josef]

Starting up a business is a two way thing..It's either you gain or loose..In a situation whereby you get a loan for your business and subsequently youare not able to raise the money given to you,how do you intend to pay? Collecting credit to start up a business gives you sleepless nights that's because you keep thinking which is actually not good for the health..So I will advise you get your capital before starting up a business to avoid fear of not been able to pay up the credit when the time is due..

 

[Sheun450]

There are no shortcuts to bypass credit constraints but the use of collateral, or the relationship lending with commercial banks, had a mitigating effect that leads to CR. With the issues of credit constraints growing over time in the ...

 

[Abdul Naveed]

As market conditions worsen, the number of loans a bank can afford decreases. Furthermore, deteriorating market conditions could trigger regulations that require banks to keep as much money in reserve as possible to ensure that they have enough to pay off their obligations. There will be money.

 

[Ayokex]

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.

Starting a business with credit facility is not a good idea and not healthy to the business at all. It is better to a capital from either personal savings, money from friends or family than to use a credit facility. In some other cases where there is no option one can use it.

 

[Sariana23]

In fact, the credit application has these consequences, not being able to cancel the debt for different reasons, you may even be foreclosed for non-payment, you would lose all the effort invested. And the benefit I see is that if the business is a success, you will keep the property and no debts.

 

[tyrim88]

Gettitng a loan facility to run your business is not actually a bad idea,But depending on loan on a new business that just started is not a good step,a business is suppose to run on avialable fun before any loan grant should be taken,because of the uncertainty associated with the terrian,that is why it's called a venture.

 

[Mawome]

If the credit facility is for the company, then it will not be too good to run a business with it. But if it's for personal use you can go ahead and use it to run whatever business of your choice the consequences will only be on one persons head, I tell you, there is nothing to loose,

 

[Hasan Raza]

Yes my dear your consequences are absolutely right. It will not be wrong to say that taking loan for the purpose of business can be a hindrance in your success. You must consult with some friends or family members to invest And you should invest your experience and time. In this way two sides can get benefit.