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

[Zubair]

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 have my own business and selling clothes myself. As you mentioned earlier that he is so keen to do this business but don't have own money, and wants to get loan to start it, so I would say he shouldn't go to get loan because it's not so easier as it seems to be. You often get no customers for a whole week, would you believe it? But once you get customers, you definitely earn a lot but he should wait for his own money but shouldn't take loan at all for this.

 

[Eodine]

It depends on your profitability ratio. You should carry out feaseability, profitability reports before you venture into any agreement of any kind for an Enterprise starting with a loan so you can work out how to repay the loan back.

 

[Ibrahim1]

I will never agree in times of pursue a debt for business because it doesn't make any sense because no matter the kind of business you use the debt to do I can bet it with you that you really going to use all the gain you realised to pay back the debt and if care is not taken your business can finally crushed

 

[Briangsam]

It could be provided the creditor will give the person the adequate time needed to make profits from the business. It is better if it is in form of a loan though which a single digit interest rate.

 

[Psalmsavatar]

Although borrowing is one of the means to get capital to start up any business but it is not really advisable to procure much debt to start a business. I'm talking from experience; when you accumulate debt to start a business, unfortunately you are doing the business for the sake of the people that lent you the money so in the long run the profit will be used to service the payback and in the end, after payment of the money borrowed, there will be no capital anymore. So it isn't advisable to procure debt to start a business.

 

[Shayo]

Going into debt to start up a business is not advisable and not buiness wise.
It is always good to start with the little one has. But since you said your friend has no startup capital at all and he has plans in place for paying back the debt, he can go ahead but he should start with small loan and grow the business from.

 

[Kehinde]

There is no rule of thumb to use when determining whether a startup should take on debt. Debt can often be faster, easier, cheaper and less of an overall headache than equity. Understanding your business needs and how effectively you will use capital can determine if debt is right for you.