Five Reasons Not to Take Out a Business loan

[Adexgrace]

People ewho are into business will always say taking loan for a business is a bad idea. One can start up business with the little capital at hand rather than getting loans to start up business which might not trun out welk and may as well affect the business growth.

 

[unhappy triad]

Personal loans are no longer offering borrowers a good deal. In fact, the banks are looking more cautious than ever before when it comes to unsecured lending. Earlier this year, lovemoney.com partner Moneyfacts, revealed that despite the bank base rate standing at a record low, rates on loans had climbed to a nine

 

[Kelly5]

Every business needs extra cash from time to time, and there are plenty of good reasons to take on debt: to launch new products, expand your business, or purchase needed inventory. But there are also plenty of bad reasons to take out a loan. Here are five.​

1. To launch a new business idea before you have thoroughly researched it. Fads come and go; the goal is the find one that sticks. Before you decide to buy into the latest fad concept, spend some time doing market research and deciding whether or not the concept is a good match with your experience and interests. Many people think that owning a restaurant is glamorous but find out later that it is very hard work. Do your homework before you take on a serious financial commitment. Should You Personally Guarantee a Loan to Your Business?

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2. Your credit cards and lines of credit are maxed out. If you have exhausted all other available credit, maybe taking on more debt is a bad idea. When lenders see that you are overextended, you will likely be required to secure the loan with assets. If you are having difficulty paying your existing financial obligations, you are entering risky territory by gambling with your facilities, inventory, equipment, or even worse, your own house. Read more about Cleaning Up Your Company’s Bad Credit Profile.

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3. To make an impulse buy you can’t afford. Perhaps there is a new technology or machinery you think would benefit your business, or maybe you want to remodel or upgrade your facilities. While all of these things may prove advantageous to your business, you won’t be able to reap the rewards if you have leveraged all of your assets and the extra profits you make go toward repaying the loan. If the idea doesn’t bring in extra revenue, you are still responsible for paying back the loan. If you used assets to secure the loan, you may end up without a business at all.
4. You saw an advertisement or received an email about unbeatable interest rates. As the old adage goes, if it sounds too good to be true, it probably is. And on the outside chance that it is true, just because you can get a great interest rate doesn’t mean you should.
5. You want to consolidate your debts but haven’t learned how to budget. Maybe your company is going through a tough time, or maybe you have mismanaged your company’s finances and are now looking to consolidate all of your debts. Debt consolidation may ease the pressure temporarily, but you need to address the underlying problem if you want your business to succeed.

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You seem to be very much on pointbin your analysis on the subject matter here. The creditors always see the debtors as if they are criminals the moment the debtors failednto pay up. Even if it is just a little number of days after due date.

 

[oluwaseun tope]

To my own opinion , it not good to start up a business with loan because the business may not have a lot the way you expect it . Secondly the business may run down and may not be able to pay back the loan. And it may caused a lot of problems.

 

[DareIsrael]

You have made very good points and I agree with every one of them. I do not believe in taking loan for start ups and using loans to pay off debts. Loans can sink a business, so, it is better to avoid them as much as possible.

Honestly it's a terrible idea. It is dangerous to Borrow loan to pay off another loan. Loan can sink up a business if it is not properly handled. So you're right it is better to avoid them as much as possible.

 

[Halexcity]

Using loan as capital to start a business may not allow the owner of the business to enjoy the business and there will still be fear and anxiousness to return the loan. MY OWN REASON ARE AS FOLLOWING: 1. It creates curriousity
2. Loan can possibly sink business
3. It causes distraction in business

 

[chicnthin]

As much as possible don't ever rely on taking out loans just to start a business. The beginning phase of the business will be hard as the sales may not be enough to pay the expenses. It will take a while before a business earns profit. And that would mean that it will take a long time to pay the loan.

 

[Nurudeen]

This is a good concept on reasons on why not to get a loan for business. Even me I don't like the idea of using loan to setup a business just because the business will need some weeks or months to develop and loan comes with quick repayment with Interest whcih might not be too good for the business in the long run

 

[Joseph555]

Loaning to start a business is big risk and it is not advisable, you will be strongly between life and dead to stand the business and in the process if the business fails you will be bound by agreement to pay the money.

 

[Ebensco]

You are right, you really made a point of what you said. Getting a loan to start a new business is not a good idea and it's not advisable. I can not ever borrow money because of opportunities shared to me through email or I seen it online, because not every sites are legit.

 

[jay]

Every business needs extra cash from time to time, and there are plenty of good reasons to take on debt: to launch new products, expand your business, or purchase needed inventory. But there are also plenty of bad reasons to take out a loan. Here are five.​

1. To launch a new business idea before you have thoroughly researched it. Fads come and go; the goal is the find one that sticks. Before you decide to buy into the latest fad concept, spend some time doing market research and deciding whether or not the concept is a good match with your experience and interests. Many people think that owning a restaurant is glamorous but find out later that it is very hard work. Do your homework before you take on a serious financial commitment. Should You Personally Guarantee a Loan to Your Business?
2. Your credit cards and lines of credit are maxed out. If you have exhausted all other available credit, maybe taking on more debt is a bad idea. When lenders see that you are overextended, you will likely be required to secure the loan with assets. If you are having difficulty paying your existing financial obligations, you are entering risky territory by gambling with your facilities, inventory, equipment, or even worse, your own house. Read more about Cleaning Up Your Company’s Bad Credit Profile.
3. To make an impulse buy you can’t afford. Perhaps there is a new technology or machinery you think would benefit your business, or maybe you want to remodel or upgrade your facilities. While all of these things may prove advantageous to your business, you won’t be able to reap the rewards if you have leveraged all of your assets and the extra profits you make go toward repaying the loan. If the idea doesn’t bring in extra revenue, you are still responsible for paying back the loan. If you used assets to secure the loan, you may end up without a business at all.
4. You saw an advertisement or received an email about unbeatable interest rates. As the old adage goes, if it sounds too good to be true, it probably is. And on the outside chance that it is true, just because you can get a great interest rate doesn’t mean you should.
5. You want to consolidate your debts but haven’t learned how to budget. Maybe your company is going through a tough time, or maybe you have mismanaged your company’s finances and are now looking to consolidate all of your debts. Debt consolidation may ease the pressure temporarily, but you need to address the underlying problem if you want your business to succeed.

Succinctly outlined. I for one don't fancy any loan for my business, the reason being that some business takes time to mature and during this stage; if you'd tried not to accumulate the interest thereby promising to pay the loan faster, you're also killing the business.

 

[Chibson]

That is why it is good to start small than to take out a business loan. You can borrow from friends, and relatives other than taking out a loan. There are so many reasons why loan is not really ideal especially for starting businesses.
These points, you just stated here a solid and good.

 

[GIFTMICHAEL]

Before doing or engaging on a serious financial commitment every business owner need to understand that any business they decide to venture into required a lot of stress and hard work.
Loan is not something you need to collect without proper consideration.

Every business needs extra cash from time to time, and there are plenty of good reasons to take on debt: to launch new products, expand your business, or purchase needed inventory. But there are also plenty of bad reasons to take out a loan. Here are five.​

1. To launch a new business idea before you have thoroughly researched it. Fads come and go; the goal is the find one that sticks. Before you decide to buy into the latest fad concept, spend some time doing market research and deciding whether or not the concept is a good match with your experience and interests. Many people think that owning a restaurant is glamorous but find out later that it is very hard work. Do your homework before you take on a serious financial commitment. Should You Personally Guarantee a Loan to Your Business?

Click Here!​

Find Credit card Here!​

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semp.net​

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2. Your credit cards and lines of credit are maxed out. If you have exhausted all other available credit, maybe taking on more debt is a bad idea. When lenders see that you are overextended, you will likely be required to secure the loan with assets. If you are having difficulty paying your existing financial obligations, you are entering risky territory by gambling with your facilities, inventory, equipment, or even worse, your own house. Read more about Cleaning Up Your Company’s Bad Credit Profile.

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3. To make an impulse buy you can’t afford. Perhaps there is a new technology or machinery you think would benefit your business, or maybe you want to remodel or upgrade your facilities. While all of these things may prove advantageous to your business, you won’t be able to reap the rewards if you have leveraged all of your assets and the extra profits you make go toward repaying the loan. If the idea doesn’t bring in extra revenue, you are still responsible for paying back the loan. If you used assets to secure the loan, you may end up without a business at all.
4. You saw an advertisement or received an email about unbeatable interest rates. As the old adage goes, if it sounds too good to be true, it probably is. And on the outside chance that it is true, just because you can get a great interest rate doesn’t mean you should.
5. You want to consolidate your debts but haven’t learned how to budget. Maybe your company is going through a tough time, or maybe you have mismanaged your company’s finances and are now looking to consolidate all of your debts. Debt consolidation may ease the pressure temporarily, but you need to address the underlying problem if you want your business to succeed.

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[Sheyemanu]

Concerning this topic, banks are looking more cautious than ever before when it comes to unsecured lending. Earlier this year, lovemoney.com partner Moneyfacts, revealed that despite the bank base rate standing at a record low, rates on loans had climbed to a nine-year high. And this trend appears to be ongoing, particularly for the smaller loans

 

[Shayo]

In addition, never borrow money to invest, the investment may look promising that you will be tempted to borrow money to invest with the hope of paying back when you get your return on investment. Investments can sideways at times so it is best to put what you can afford out of your income not incurring debts.

 

[Damscooguns73]

Concerning reasons for not taking a loan to start a business. Well, am not really a fan of taking loan to start up a business unless you have started already and you are assure of the sales and growth of the business but financially down, you can take a loan for that. Collecting loan as a starter will make your mind experience diversification and such person wont be fully concentrated on the business

 

[Richard92]

As a business owner you must not take on a loan because of the high rate of interest on loans. If your business do not yeild much profit you will not be able to pay. You must not also take loan for your business because of the short time to pay back the loans.

 

[Victor001]

Taking loan is good in some aspects and bad in some aspects. If you have short term demand its adviceable not to take loan as compared to long term demand. As therevis no guarantee that you will offset your needs at that point.

 

[Seun4luv]

If you are confident the opportunity will expand your business and put you in an even stronger place financially, consider taking out a loan. Many reputable lenders offer application processing times of a few days or less. If this golden opportunity seems like a perfect opportunity to expand, get moving.

 

[Ezzyoj]

You have really made some valid points in this write up. Acquiring debts to expand your business or start a business is a very bad strategy. One must be sure of the business he or she is going into and must at least have 70 to 80 percent of the capital before trying to get financial assistance from outside. A business must be well studied before venturing into it