Consequences of using credit facility to run a business.

[eenya001]

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 money. If you can sell an asset like a car or a land then that is better instead of getting a mortgage that you may not be able to pay back.

The pressure of the payment can also lead you on making wrong choices that would not be favourable for your business owing to the fact that you have an impending debt hanging over your head, I always advise that as a startup, you should avoid taking loans to kickstart your business.

 

[eLdavis]

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?

This is exactly the risk Involved in taking loans to run or startup a business. If it does not go well, you would have to find a way to pay back. In other words you are just working for your self.

 

[Ceeny007]

Some people don't actually have a choice as they don't have personal savings or family to borrow from,they virtually become workers for those institution they owe money especially if they make daily returns
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The pressure of the payment can also lead you on making wrong choices that would not be favourable for your business owing to the fact that you have an impending debt hanging over your head, I always advise that as a startup, you should avoid taking loans to kickstart your business.

Exactly,You might render services or goods at a lesser price in order to meet up the obligation with the lending institution

 

[Billy]

A business is like a gamble. You cannot predict exactly how it can go. Therefore it is not a good idea to put a loan or credit facility of any kind on it because you are not sure how things will pan out. The pandemic has been the downfall of many businesses because many were not established with th rethought of a pandemic of this magnitude happening.

 

[Setfragil]

Running a business with credit facility is not bad but one must be very careful enough in managing the resources that the money was taken for, so as to be able to pay back at the agreed period of time.

 

[Kaffyfolla]

The consequence of running the business is when you are unable to fulfil your debt obligations, the business may likely wind up suddenly and at the same time your property used as collateral security might be used to settle the debt

 

[Alexandoy]

The consequence of running the business is when you are unable to fulfil your debt obligations, the business may likely wind up suddenly and at the same time your property used as collateral security might be used to settle the debt

The debt payment can be a lingering obligation when the amount of debt is quite big. The monthly installment can interfere with the cash flow of the business and hamper the operation.

 

[Ceeny007]

It depends on the terms agreed between the business owner and the financing firm,if it's monthly payment plan it will hurt the business greatly

 

[Ralphjoe]

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?

The only consequences I see when someone make use of credit facilities to run a business is that you run a high risk of forfeiting that business if you default in paying off your debts.

 

[Kunkun]

No doubt all businesses has it's risks involved and one has to get the capital from somewhere too, I it's through loans especially from banks, as a business owner the urge not to fail and lay back should not be priority but effectively running the business

 

[McIrx]

I don't believe getting a loan will make one work harder. Using a loan as a motivation is a very steep road to business failure and a possible depression. You go into a business and work hard because you believed in the business. Once paying back a loan becomes motivation mistakes are bound to happen.

 

[Setho]

It is true that when you use loans or money from a credit facility to start a business and it feels it will be difficult to repay but then for many people what other option do they have.

 

[Kubiat-Abasi]

I usually stand on the premise that I won't obtain a loan to start a business. Regardless, I could give a try if I'm getting a loan with no interest attached. I don't want fear and heartache to circle me like a bottleneck.

 

[Elfinito]

Taking a loan to start a business has many bad consequences.
Some loan companies have stipulated time for you to pay your loans and if they don't have an option for extension, if you haven't made any profit yet to pay back the loan, then you may need to get another loan to repay one.
And this may get you into many debts

 

[Godspower]

Taking a loan from banks or other financial institutions to start up a business can be very risky. You might face difficulties in paying the loans at the due date if the business is not profitable.

 

[Ghost1]

There is nothing like positives or advantages of getting loans. It can only be seen as an advantage because it helps one go ahead with the plan as soon as possible

 

[Stnicholaz]

I once worked in financial consulting firm. My primary assignment was to recover loans for banks. Most of people who used loan to start their business find it difficult to pay back and interest keep increasing.

Credit facility is good for already established business to expand the business. They can easily pay back at due to time.

 

[eLdavis]

I once worked in financial consulting firm. My primary assignment was to recover loans for banks. Most of people who used loan to start their business find it difficult to pay back and interest keep increasing.

Credit facility is good for already established business to expand the business. They can easily pay back at due to time.

Wow with your field, I guess you saw alot of stories and have alot of experience. How are you able to cope with all the excuses these clients give and all that?

 

[Abigael]

I don't believe getting a loan will make one work harder. Using a loan as a motivation is a very steep road to business failure and a possible depression. You go into a business and work hard because you believed in the business. Once paying back a loan becomes motivation mistakes are bound to happen.

That is very right. If paying back a loan becomes your only motivation to work, you will end up making many mistakes. It is therefore best to have other reasons to stay motivated in business.

 

[Thinker009]

Its absolutely not good , I think it could even be a very big disadvantage to the business in the long run , because the owner would be scared of Making some effective decision to move the business and enlarge it just because he borrow a loan