Is it advisable to procure a debt to start up a new business?

[Jonaville1]

You can only advise him on this and nothing more. The truth is that getting loan to start a new business is somewhat difficult since you are starting new while borrowing on a heavy interest. Is that the best he can do? Unless the business is sure of giving 100% profit in return, then this is not advisable at all!

Exactly, that is what I have been trying to make him understand. Starting a new business with a loan is definitely not a good idea. There is no 100% guarantee that he will hit it off big in the business immediately he starts. At least it will take some time time. But he is not listening.

 

[Emma Aneni]

Taking a loan to start up a business depends on the financial status of the individual, people tend to take loan due to lack of enough funds to start. It’s really risky to take a loan but if you trust in yourself that you can pay back on the given amount of time then it’s advisable you take the loan.

 

[Afrinish]

I think that being optimistic and being reckless and careless are two different things and from what you have described in this scenario without having a back up plan and without having a business plan as well this is likely to be considered to be more of a reckless act and is not the recipe for success in my opinion

 

[Peppul]

For me it's not good to procure a debt to start up a business without having a backup incase thing go wrong, what if the business didn't profit you and you end up losing your investment capital how then will you pay your debt. It's best you work for your capital or if you have a property to mortgage you can do that so you won't have to be in a mess if the business didn't go smoothly.

 

[Heatman]

I have someone who is interested in the sale of clothes, but he doesn't have any start up capital. He intends to get a loan to get his business rolling, and he seems so sure about repaying it back on time. But I have a bad feeling about this. Is it really wise to go into debt to do business you are just venturing into? I'm not trying to be pessimistic here, but what if the turn up is lower than what he expected? I tried to talk to him about it but he just shrugged it off as no big deal.
Should I leave him to go on with his plan or try to dissuade him?

I believe so many people do this on regular basis because most times such people don't have the needed capital to start up the business they want. The most important thing is to make sure that you have good plan on your business and make sure you succeed in it, so you can pay back the loan.

 

[Doradorwa]

If such person is getting the loan from a family member or friends then that's okay but getting a loan from bank to start a cloth business is absurb... Clothes are seasonal... They are not like everyday business or a grocery shop where customers comes in every day....it's a bad idea if the loan is not from a family member or a friend.

 

[Oliver 20]

Borrowing to start a business is thus at least in theory more safe, but the amount the lender can realize in return is fixed to the principal and to the interest charged. Investment is more risky, but if the company is very successful, the upward potential for the investor may be very attractive; the downside is total loss of the investment

 

[Seun4luv]

For entrepreneurs without the personal savings to start a business, debt is often the only viable option. For those businesses that qualify for a loan, interest rates are still relatively low, meaning it is not going to cost a lot in interest payments to borrow.

 

[giddy]

Don't do that bro, you wont have rest of mind
Running your own business, you would have total control over everything … or not. Starting a business can actually make you feel less in control. You can't control when customers payyou, or even if they want to buy your product.You can't force your employees to do things to your crazy expectations.

 

[Josemendez]

Borrowing to start a business may not really be bad , provided that the person who borrowed the money has good and feasible business he placed the money in . It helps to motivate the borrower towards working hard in order to be able to pay back the loan .

 

[eenya001]

My advise would be that he does not try such because for now, he can't predict for a fact how the business might eventually turn out to be, he should only think of taking a loan, when it's time to take the business to the next level

 

[shakky2]

To me, getting a loan for a start up business is a bad idea because there are so many risks involved.one sure characteristics in start up business is risky,it is the case that one doesn't know how the business will turn out whether gain or loss but whichever side is the result.for instance,if a particular business failed and the capital source of the business is through obscuring of loan,how does the inventor of the business intend paying back the loan and this may lead to future setback of the person involved.

 

[Highflyer]

For entrepreneurs without the personal savings to start a business, debt is often the only viable option. ... For those businesses that qualify for a loan, interest rates are still relatively low, meaning it is not going to cost a lot in interest payments to borrow.
Disadvantages of debt financing

Accessibility - banks are conservative when lending money. New businesses may find it difficult to secure debt finance. Repayments - you need to be sure your business can generate enough cash to service the debt (i.e. repayments plus interest).

 

[Aniwhyte]

I would not advise anyone to collect a loan just to start up a business as it would be difficult to pay back such loan if things doesn't goes as planned, but if he/she intends taking this loan and feels it is compulsory then I would rather advise that he borrows some money from family and friends instead of taking a loan from the bank.

 

[Adam13]

If you must borrow money to start s business, do not borrow from everyone. Borrow from people who you're sure will be patient with you until you have their money back.
Furthermore, before you borrow money to start a business, make sure you know the pros and con's of that business so that you'll avoid useless wasting of borrowed money. Make sure you are sure about the step you are taking, this will help you put the money into proper use thereby maximizing returns to pay your debt.

 

[Abigael]

I have someone who is interested in the sale of clothes, but he doesn't have any start up capital. He intends to get a loan to get his business rolling, and he seems so sure about repaying it back on time. But I have a bad feeling about this. Is it really wise to go into debt to do business you are just venturing into? I'm not trying to be pessimistic here, but what if the turn up is lower than what he expected? I tried to talk to him about it but he just shrugged it off as no big deal.
Should I leave him to go on with his plan or try to dissuade him?

Starting a business with a loan is very risky and I would not advise anyone to go for it. Paying back the loan may be so hard if the business does not go well. So its best to try other sources of capital such as saving up or donations from friends and family.

 

[Pirate]

Well, I don't actually understand how people come across such ideas. Why would someone want to earn money just to return it back to someone else. That's why planning is very important, with planning such situations can be avoided.
If you decide to start a certain business, you have to plan on time and start raising money, even if it means to work part time, it's better than taking out a loan to start a business.

 

[btaliat]

It is not a bad idea to start a business with a debt but that is if the business has future. You don't need to incure more debts. You can engage in some activites that can fetch you money in order to start a business.

 

[WhiteHouse]

Much as I would prompted you pick the credit utilizing your compensation as a security, I would protest the idea of business you expect going into.

1. Considering the nature and state of our street organization, how would you expect to alleviate against danger, for example, mishaps, however I ask not for it?

2. What is the recompense time frame for the advance and can the compensation from the two sources (pay and truck) counterbalance it inside the advance time frame?

3. The premium charged on credits at present hooves around 29%p.a, would you be able to support it?

 

[golamike]

I'd rather you call it a loan instead of debt. Truth is many of the big businesses around the globe started with loans. Some still depend on loans for the running of their businesses. Countries get loans too. There's nothing wrong with getting a loan to start or run a business. However, you have to put some things into consideration before you go for a loan. Why are you getting a loan? What purpose will the loan serve? How do you intend to pay back the loan? If your plans don't work out as expected, what happens? You must have definite and realistic answers to these questions before you consider a loan. Mind you, I still feel getting a loan should be the very last option of financing your business. If you have alternatives that would serve same purpose, it's best you avoid loans.