Five Reasons Not to Take Out a Business loan

[FreshKaz11]

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 wont 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.

Loan is very essential in a business if you want to grow more in it,because most companies we see out there run their businesses on a loan,but you out their won't know or you working under them will never loan...

But the truth still remain that we can't do without a loan if you want to be successful in your business,and my country as a whole still take loans from other country as people do believe we have enough to take care of our self lol .

 

[adeniji]

Five Reasons Not to Take Out a Business loan.​

(1). Business loan must be kept to increases gain in business.
(2). Keeping business load serve as a backbone to support falling down of business.
(3). Keeping business loan make business capital meet up with the main target.
(4). Keeping business loan can be reused to borrow another loan.
(5). Keeping business loan bring more idear on how to make use of money increasment.

 

[Fabulous]

As for me taking loan to start,expand or manage a business is bad an also good. For the good part, this is when you want to start up a business and you need an extra capital to support you financially. The bad is when after collecting the loan or after making use of it, then you now come to realize that you have to be paying back with interest that is almost your profit.

 

[Abigael]

Taking a loan for a new business venture is truly not advisable. These are very good reasons you have given for one not to do so. There are many consequences to this and many entrepreneurs do not consider them. Then the business start failing due to bankruptcy and inability to breakeven.

 

[Samuel77]

according to my own point of view the five reasons why I will not like to take out a business loan, it because of my fear in the business I am about to set up, and also I need to make observation about the interest rate, if the interest rate is too high, I will not be able to take out the loan

 

[Jlife]

I don't not always advise people to take a loan to start up something they do not know how it will be in the future because the business may end up collapsing or it may not reach the expectation you were dreaming of and that can cause a great loss or depression if you are not able to pay back the loan.

 

[Igbokwe chidera]

I totally agree with everything you've said here. Taking loans to start a new business is a bit dangerous. Especially when you don't have experience in that field or you didn't conduct a proper feasibility study or the business you invest in is not sure to bring in enough income to pay back

 

[Adam13]

There are a number of reasons one should not take a business loan one of which is instability. It depends though on the person or firm you collected the loan from. There are people that give you loan and expect you to pay within a fix time. If you fail to reach the target at the stipulated time then a big problem may arise and it may lead to your business shutting down without you gaining much coupled with the paymwbnht of loan you will have to cope with.

 

[Chaudhary10]

You can make a living writing. Yes, it's possible to support yourself by writing full-time. And you don't have to be famous or lucky to do it. I've done it for the past six years and have coached thousands of others through the same process, seeing many of them succeed.

 

[Bilal0087]

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.

Yes dear you are very right, I also consider it worse step to start a business with loan money because in this way a person cannot pay his full attention for business growth and development.
Rather he will always think about returning the loan money and if there comes any losses in the business he may god panic and may fail in business.

 

[Shahrukh irshad]

1 business loan is a big liability
2 loan makes you uncomfortable
3 loan will make you pay interest on it which is quite difficult
4 if you borrow from a friend you have to pay back its necessary but making profit is your luck
5 if your business didn't work then you have to pay and paying then is impossible because you don't have any money or backup

 

[Heatman]

Personally, I would never be comfortable to get loans to start my own business because of the pressure that it comes with. I'm not even worried about the risk of the business not being successful but any money that takes away my peace of mind is not needed.

 

[Marissa]

A comprehensive reason you have drawn there. The greatest convincing reason for me is that, if you will not be bright to pay back the loan then you shouldn't take it in the first place. Furthermore, check what the importance rate is, if it's too high, I would recommend you not to take it also.

 

[Romanmam]

They might not be as established or may not be diversified enough to protect them from market fluctuations. For this reason, many banks will require businesses to offer assets as collateral – if the business can't pay the loan back, the bank simply takes the assets

 

[Muhammadawais]

If you are sure that the opportunity will grow your company and position you financially in an even better location, consider taking out a loan. Some reputable lenders provide processing times of a few hours or less for applications. If this good opportunity seems like a great chance to grow, get going.

 

[kayode10]

The worst thing you can do with your loan or a credit card is to buy things on impulse. These are busy can you ruin in your financial status if care is not taken. The best things you can do with your credit or no new aqua is to invest it in an acceptable bringing money for you. in this way the access will pay back the loan by itself you don't you have to put in any effort

 

[Bagg victor]

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-year high. And this trend appears to be ongoing, particularly for smaller loans.

 

[Janita]

Yes to avoid taking loans is really great choice because it can cause harm affect on your business.
It really depends on the luck and by the Help of great time we somehow get profit from the loan taken.
There are lots of sites where we take or invest loans to start business but I will always suggest you to avoid taking loans for starting business.

 

[Princeeffiong]

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-year high. And this trend appears to be ongoing, particularly for smaller loans.

 

[Kennysplash]

Many people are so negative when it comes to loans. If you have a great business idea mad you don't have the start up capital then you have no choice but to go for loan. As long as you know and trust what you are doing you will be fine.