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View Full Version : Is this risky to start a new business with loan?



businessman1927
08-11-2010, 07:28 AM
Should i start my business with loan?Is this safe or not in this recent period?

Spider
08-11-2010, 08:58 AM
In my opinion, starting a business iwth a loan is risky in any environment, and not recommended. Start with your own money. If you don't have money, get a job and save hard until you can start with your own money.

Harold Mansfield
08-11-2010, 10:46 AM
Starting a business is a risk no matter what the economy is like. I agree that you should use as much as your own money and resources as possible, besides..in this economy...you are unlikely to get anything unless lenders see that you believe in the business enough to risk your own capitol first.

nealrm
08-12-2010, 04:11 PM
If you can advoid debt in starting a business it will put you in a position that allows you to better weather downturns. The same goes for any reoccuring payments. The less fixed expenses you have the stronger your position.

Business Attorney
08-13-2010, 05:51 PM
I agree that it is better to start without debt, but from a practical standpoint there are many businesses that are difficult to start without debt of some kind. That is particularly true for businesses that are capital intensive. Sometimes it is a straight out loan, but in other cases it may be an equipment lease, leasehold improvements which are paid for by the landlord and recouped over the life of the lease, or inventory purchased on terms or held on consignment. All involve using someone else's capital to finance the needs of your business.

Most of the businesses in this forum are primarily service businesses and are not capital intensive. For a service business, it is typically easier to set aside the money needed for equipment and tools, but even a service business may need to finance larger purchases such as a vehicle.

But, as the others have pointed out, adding debt service to your fixed expenses is one more burden you have to deal with.