Do all businesses need loans??

i want to start out a small business i have the sufficient amount to start it or should i keep the amount i have for future use or needs

 

IMO start with the capital you have and then get a loan if you need one.

 

Start with the money you have, I would suggest not getting a loan.

 

business loan (as opposed to own savings) if a way to transfer the risk of your start up from yourself to a bank for a fee (which is % of loaned amount). Problem thought unless you have a solid winning business plan, the bank will require secure the loan with your personal assets as collateral.

 

look any business need money or finance but the thing is if you have sufficient money then you invest your capital only.
loan create burden upon you.

 

You should start your business with your money after some growth of the business you should take loan.

 

yes you are right that every business need talent but there is also money motivation power without it talent doesnot measure ,thank for reply.

 

i welcome your suggestion .

 

I recommend getting a loan and using your capital as collateral. This may sound counter-intuitive, but with a new business, it's vital you build business credit early. That way you can qualify for bigger and better (unsecured) business loans later when you need them for expansion, emergencies, liquid capital, etc. Without business credit history, it's near-impossible to get business loans without personal guarantees and stellar personal credit.

Besides loans, you can free up cash in your business by negotiating Net 30 credit terms with your vendors. This gives you a lot of upside leverage... You can invest in inventory and advertising and pay your vendors from your sales proceeds before the bills come due - often at zero interest.

 

If you need to take out a loan then do it but if you can do it with what you have, use what you have first.

 

I think it is better to do without any kind of loans because it can happen so that your business will fail and where will you take the money than to pay off the loan? I prefer to rely on my own capital.

 

if the business fails and have to liquidate and this is an unsecured loan - bank will lose money not you. So would you prefer risk own capital or bank's?

 

Most likely the bank will ask for personal guarantee of the loan, so bank will not lose money.. since a start up has no asset for collateral.. it is very difficult to get biz loan.. more likely it will be personal loan.. unless you fund your business with credit card... I would say to the OP to save the money for future ... most start up underestimate the cost of getting business off the ground ...

 

you guys gave me so much information about the background of loans , but i'm scared to use my money my business fails and i would have no feedback to fall on which would be terrible , i'm scared of bankruptcy but i really don't want to take a loan because of interest rate and so on.... i think though in my case i could pay half the money and loan the other half i guess i don't know what do you guys think about this decision ??

 

In business, there will always be risk. Risk of failing, risk of not making it through. If you are a risk taker, then go for the business. There is no assurance about anything. Just like any job, you will never be certain if you will not be laid off next month or today.

It would be better to start small, stay aside some money in case something might go wrong. At least, if you have something to fall back with. Never throw away money that you need. Be sure you have some money left.

As to loans, banks do have interest rates, if you failed to pay on due to date, you will get penalty for that, and you have to have collateral like a house or a car in exchange for the money you want to borrow (secured loan).

It's better to start the business on your capital and make your way up. Of you don't want to use your money go ask your friends with extra cash to be your partner and you will be the industrial partner ( who will do all the work since you don't want to use your money as capital) or have it 50-50 in sharing for the capital and profits will be 50-50 too.

 

i think the 50-50 idea it will really work for me , i really don't want to be tied to a bank loans aren't fun but i would like to make banks my last resort honestly

 

Start up with what you've got because in the end nobody wants to owe anyone money.

 

thats is very true

 

What type of business is it? That really is the determining factor if you should get a loan or not. Most business do not start off as businesses they work their way into it then once you start making some sales then register for a small business permit.

I have ran two successful businesses and both were started with very little capital, small overhead but then again a business is a growing process. My one business started as a hobby and that hobby grew into my business. So knowing what type of business you are trying to start is the important missing information.

A retail store for example has a vast amount of overhead exspenses before opening the doors but a internet company that deals with just digital products has no overhead at all. So an internet company does not need a loan right off the bat they need customers and that only comes with alot of leg work on your part. So you can see why knowing what type of business is important to make a decision.

 

actually my business is about party planning , weddings , birthdays , bashes , college parties and so on... it very small but it was actually a talent of mine along time agoso i decided taking it up professionally all i need is an office a license and good advertisments thats the deal so i'm thinking of turning it into a partnership so i won't use all of my capital up until i'm up and running and maybe i could buy my other half back also i so i won't have to take a loan from the bank