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justSaying
02-22-2014, 12:39 AM
Hi.
I have been debating about this with friends for long. Is it better to save up to start a business or to take up a loan?

Saving up is time inefficient, though you avoid the interest rates. Loans on the other hand let you start your project now, though you now have to pay up the interest rates.

What tipping point works for you to decide of either?

delusional
02-24-2014, 01:08 PM
You almost always need to do both. Unless you start really small, then saving is enough. You need to have about 30-50% of what you want to own as a total capital if you want to loan some money.

adi004
02-24-2014, 03:25 PM
i think you should do both, half from your savings then half from loan, at least you wouldn't have to pay too much interest..

owesem75
02-24-2014, 03:30 PM
If you know how to run your business and confident enough that you could make it through, it is best to apply for loan and leverage. Use the borrowed capital for (an investment), and work to increase your profits and make it to be greater than the interest payable. From the profit, pay your loan as much as possible and as quick as you can, and so you can enjoy the reward of having a sustainable business started and run from a borrowed capital. Good luck to you.

Ryand88
02-24-2014, 03:50 PM
Get a loan then use the savings as a safety net? I think this could work fairly well if you are applicable for a loan but really you should do both as said so many times on this thread ; there is no way your savings could cover all the overheads of starting a business which is where the loan comes in but personal savings are definitely a good start short term but long term finance you need a loan to be able to retain any profit.

mameeker@cuse
02-24-2014, 04:33 PM
I would get a loan and try to invest the least amount of money you can into your own business. This is so that the business does not bankrupt you individually.

Taru
02-24-2014, 10:43 PM
Loans are much better, in my opinion, given that the plan is solid enough to have the proper exit strategies and more importantly - end goals and realistic timelines. If the plan is good enough, then loans aren't as risky, and in the meantime you can just use the savings for other more minor investments or even to just stay afloat in a personal financial way. It's much better to utilize these advantages where it's available, in my opinion, but only if it's used with respect for the gravity of it all.

crimsonghost747
02-25-2014, 01:25 PM
A mix of both. Loan obviously allows you to start faster, and let's face it: the interest rates are nothing at the moment. Just make sure that you can keep paying the loan even if the business doesn't start as well as expected, because otherwise that could leave a big financial problem for you.

idlecuriosities
02-25-2014, 04:07 PM
While it is great to have some cash saved up, I think the best decision if you are confident in your potential business is to get a loan. It will help your credit when your business initially takes off, and you've already established a relationship with the bank for when it is time to think about expansion.

DomDom
02-25-2014, 04:47 PM
It also depends on how experienced you are. Its always better to save up if you can in my mind because you know the worth of the money and wont squander it like a credit.

LindaKay
02-25-2014, 07:45 PM
I definitely agree with the other posters who said some of both.

Rainman
02-26-2014, 04:22 AM
If you have assets that can be used as security to get a loan from a bank and you're certain that the business you intend to start will start generating cash as soon as you get it going, I'd recommend getting a loan and getting straight into business. You don't need to mind the interest you'll pay because heck, if you're making profits, paying a little out isn't so bad.

alec
02-26-2014, 05:41 AM
If you're just beginning and lack business experience I'd say you need a mix of both. This way if you fail you got it part covered and can try again fairly quickly. On the other hand, if you fail and a loan is the base of your business it'll take a while until you get back on your feet. Or, like others here suggested, you can just take a loan if you're absolutely sure of how your newly born business will perform.

In the end, the point of choosing one or another resides in being able to recoup from the money loss as fast as possible in the case of failure.

janineaa
02-26-2014, 07:11 AM
I think results will yield faster if one just gets a loan for starting a business or any other project. Saving may take years and it will waste a lot of valuable time and potential opportunities. With regard to getting a loan though, one usually needs collateral to have proof that he or she is capable of paying off that loan, so that is a completely different story. If someone close can help one out for collateral then that's a win-win for the one thinking of loaning for the project.

idlecuriosities
02-26-2014, 09:20 AM
I think results will yield faster if one just gets a loan for starting a business or any other project. Saving may take years and it will waste a lot of valuable time and potential opportunities. With regard to getting a loan though, one usually needs collateral to have proof that he or she is capable of paying off that loan, so that is a completely different story. If someone close can help one out for collateral then that's a win-win for the one thinking of loaning for the project.

This is something I forgot to mention in my previous post. You can't just walk into a bank and expect them to hand you thousands of dollars. If you don't have any sort of collateral then maybe saving would be your best option.

Gmac9100
02-26-2014, 09:45 AM
I would suggest you save up. If you take a loan, and your business fails. Not only do you have to payback a loan with interest rates, but you also have no income. That is simply to much risk, Unless you are absolutely sure that your business will prosper.

Taru
02-27-2014, 08:59 PM
If you have assets that can be used as security to get a loan from a bank and you're certain that the business you intend to start will start generating cash as soon as you get it going, I'd recommend getting a loan and getting straight into business. You don't need to mind the interest you'll pay because heck, if you're making profits, paying a little out isn't so bad.

I agree with this statement. If you have proper plans and have the calculations done in order, then you'd have a better idea on how to pay out a loan which I think is infinitely better than waiting to save up enough capital. If you calculate it specifically enough, you'd figure out how long it would take to completely pay off the loan even with the interests, given that you view it realistically and also that you provide yourself with some good exit strategies.

pahagwl
03-01-2014, 01:11 PM
I would recommend you to try to fund your business from your savings. This is due to the reason that in the initial stages of the business, it is very difficult for the business to be able to cover all the expenses. So, a loan would only add to your add to your existing expenses in the form of an interest burden

Executive Capital Finance
03-01-2014, 02:54 PM
Billionaire Mark Cuban was quoted in a recent interview by saying that "anyone who takes out a loan to start a business is a moron". I have to agree with him for the fact that until a new business has created enough revenue to afford to payback debt service, a loan should not be considered.

If you're just starting out, you will need to raise seed capital by way of family and friends, or your own savings, to develop your product or service and to set up the company in preparation for the initial marketing and sales push, which you will be doing yourself since you don't have a sales team yet. As a matter of fact, you will be doing everything yourself for a while so you better be talented and educated in sales, marketing, financing, manufacturing and distribution if you want to survive the first year.

Forget about going to the bank or looking for an equity partner at this point because you have not proven that your product (or storefront with other products) or service, will be saleable and profitable in the current marketplace. Whatever you do, don’t make the mistake of taking out a personal loan to start a company. In a recent interview, Mark Cuban said that “anyone who takes out a loan (from a bank or private lender) to start a business is a moron” and I fully agree with him because the debt service will kill a brand new business in a heartbeat.

Until you have "proof of product" and have generated some revenue from sales, no financial entity, public or private, (which includes banks, credit unions, venture capitalists, angel investors or private lenders) will want to lend you money because all you basically have is an idea. All preliminary costs will be coming out of your pocket (or a rich uncle) until you reach the point of revenue generation. If you think that this is not attainable, don't even bother as it will be a losing proposition from the beginning (remember that 90% of startups fail).

Once you have reached the level of creating some revenue with incremental increases, and you have developed a professional presentation which includes a website, presentation deck, business plan, financial projections, etc., that make you look like a seasoned entrepreneur, you will be qualified to pursue avenues such as crowd funding (to attract smaller angel investors) in order to raise the initial capital necessary to expand the business and bring it to the level of substantial revenue (between $500,000 and $1,000,000 in annually gross revenue).

Upon reaching this level, you will then be able to apply for debt financing (because you are profitable and your revenue says you can afford the payments) from a bank if you have perfect credit, lots of time to waste and plenty of collateral for them to lien and encumber, or from a private lender who will be a little more expensive, but a lot quicker and more accommodating when it comes to credit and assets. Debt financing, if done correctly, will allow your company to grow and expand at a controllable pace.

At the next point (3 to 5 years down the road) you will hopefully have a very successful and thriving business, generating $10,000,000 annually, that will attract an equity investment firm who will offer to provide the much larger quantities of capital (and the most expensive) necessary to further expand the company. Most business owners don't want to go this far because of the responsibilities involved in taking on equity partners, the percentage loss of ownership and the fact that there will be another cook in the kitchen that might have a conflicting opinion in the decision making processes of the company.

Good luck, it's a long and rocky road, only taken by those who have the perseverance to withstand the hard work and long hours needed to achieve success.

DarioEM
03-02-2014, 09:20 AM
In my opinion there is no solid answer for this question without analyzing a few things, some include:

What is your income?
What kind of project do you want to start and fund?
Brick and mortar or online?
What is your knowledge and experience related to the business you want to start?
Who is your target market?
Is the product or service you want to market already selling and in high demand? (High demand is always a good thing!)

These are some questions to consider

Lostvalleyguy
03-02-2014, 11:55 AM
You will need to sit down and crunch some numbers. Try to get an idea of what your interest rate may be. How much money will you need to start up and carry yourself through the first few months? How long would it take you to save? How long to pay off the loan? How much money do you expect to be able to put back in to paying off the loan per month from the business?
In order to get a loan in the first place, you will need to be able to answer many of these questions and more. If you are replacing your current source of income, make sure you have the savings in place to keep your belly full and a roof over your head while the business starts up.

pahagwl
03-04-2014, 09:06 AM
You will need to sit down and crunch some numbers. Try to get an idea of what your interest rate may be. How much money will you need to start up and carry yourself through the first few months? How long would it take you to save? How long to pay off the loan? How much money do you expect to be able to put back in to paying off the loan per month from the business?
In order to get a loan in the first place, you will need to be able to answer many of these questions and more. If you are replacing your current source of income, make sure you have the savings in place to keep your belly full and a roof over your head while the business starts up.
I completely agree with LostValleyguy's comments that at the end of the day you have to do some intense number crunching in order to make your decision. You have to find out whether the interest costs which you will incur will be able to earn you an amount which is over and above the interest cost. And you have to take into account all possible contingencies while making these calculations.

dolly fsession
03-05-2014, 06:56 AM
I would get a loan and try to invest the least amount of money you can into your own business. This is so that the business does not bankrupt you individually.

DomDom
03-05-2014, 02:23 PM
I completely agree with LostValleyguy's comments that at the end of the day you have to do some intense number crunching in order to make your decision. You have to find out whether the interest costs which you will incur will be able to earn you an amount which is over and above the interest cost. And you have to take into account all possible contingencies while making these calculations.

If your business can be sustained and return the credit while making you a good enough profit in the WORST CASE scenario then you should take a loan :)

novasparker
03-09-2014, 07:41 PM
Saving may be inefficient but launching a business with debt is a sure fire way to put you and your new business at a distinct disadvantage. I personally believe that if you need money and can't or aren't willing to save up for it, you can try finding venture capital money or launch a crowd funding effort. This way you can get some cash without having to repay it right off the bat. If this is a startup you'll have to prove that you have the chops before a VC will give you any money, but if you have experience and a solid business plan, then this might be right up your alley. And being debt free will go a long way to helping you secure VC funds.

Oivas
03-10-2014, 02:04 AM
You need to ask yourself a different question. The question that I had asked myself was:

1. Which of the one should I do (saving or loan) to get started soon?
2. Once I get started soon, what are my prospects of paying back (in case of loan) or saving (in case of wealth creation)?

When you attempt to answer this that is when you make progress in starting and running a business. Let me know, if you need any more help on this.

gHiros
03-10-2014, 03:41 AM
Yes, I agree w/ LostValleyGuy. Work with some numbers and map out a business plan. If your business will see a profit over the next "X" number of years, then take out a loan covering "Y" number of years so that you can comfortably pay back the loan.

Good Luck!

mikka254
03-14-2014, 04:08 AM
The decision to save for your business is only logical if there is a source of income at that moment that will lead to you getting enough money to start your business. It is advisable to get capital from your own pocket if you can. This will not only give you a source of accomplishment but also a way of maintain power over your own business. If you consider borrowing money from the bank, it should be because there are orders to fulfil and not just because you are inpatient. When your business receives orders and you require stock, that's when you should take a loan. Taking a loan to overload on stock with zero orders is a common mistake that leads to poor company growth and most times debt.

lisacarolynn
03-15-2014, 01:43 PM
Saving is good though it must n should not make one miserly, mean and preoccupied to accumulate more n more. Borrowing is allowed if it is real need and it must not be polluted with interests and strict time bounds to pay, since situations,circumstances will be unpredictable. I don't like banks at all.

caparica007
03-19-2014, 04:17 AM
I think that saving for a business is something really hard, let's face it, opening up a business requires a lot of money and the average person doesn't have the capacity to save so much money. So I think that the most realistic option is to ask for a loan, it's always a risky option because our neck is on the line, but we have faith on our project and we have commitment we should go for it, it's our chance to make it in this life.

HeinrichM
03-19-2014, 08:57 AM
If you can afford to save for your new business then that is what you should do. When you take out a loan the repayments add to your business overheads and this can place you under a lot of pressure. Most new businesses takes time before it becomes profitable and you want to keep your overheads as low as possible. In the end most people would combine both savings and a loan to start a new business.

It is important to draw-up a business plan that will help you to determine the amount that you can easily afford to repay on a loan. Do not take out a bigger loan than what you can easily afford to repay.

DomDom
03-19-2014, 05:51 PM
If you can afford to save for your new business then that is what you should do. When you take out a loan the repayments add to your business overheads and this can place you under a lot of pressure. Most new businesses takes time before it becomes profitable and you want to keep your overheads as low as possible. In the end most people would combine both savings and a loan to start a new business.

It is important to draw-up a business plan that will help you to determine the amount that you can easily afford to repay on a loan. Do not take out a bigger loan than what you can easily afford to repay.

Simply said, its better to save because if you waste it atleast you dont owe anybody anything!

caparica007
03-20-2014, 04:15 AM
Simply said, its better to save because if you waste it atleast you dont owe anybody anything!

Of course it's better to save, no one wants to ask for money, but most business opportunities are located in time and if in that exact time and place you can't find the money fast the opportunity is lost and what are you going to do? No time to save!

bauss
03-21-2014, 10:49 AM
My credit is awful so I wouldn't be able to get a loan, but if that option is available for you, than you should try to get a business loan. It'd help jump start your business, and get things moving at a rapid pace. I wouldn't worry too much about paying interest, because you'll get a bigger return with more funds available because of a loan.

pahagwl
03-21-2014, 01:57 PM
If you can afford to save for your new business then that is what you should do. When you take out a loan the repayments add to your business overheads and this can place you under a lot of pressure. Most new businesses takes time before it becomes profitable and you want to keep your overheads as low as possible. In the end most people would combine both savings and a loan to start a new business.

It is important to draw-up a business plan that will help you to determine the amount that you can easily afford to repay on a loan. Do not take out a bigger loan than what you can easily afford to repay.

I completely agree with HeinrichM's point that you should avoid taking a loan because the interest costs will add to your existing overheads. And as we all know, it is very difficult for the business to stay out of the red in its initial years. I would recommend you to crunch some numbers and estimate your level of earnings and turnover in different scenarios and then decide whether its feasible to take a loan or not.

DomDom
03-21-2014, 04:47 PM
Of course it's better to save, no one wants to ask for money, but most business opportunities are located in time and if in that exact time and place you can't find the money fast the opportunity is lost and what are you going to do? No time to save!

The best solution is to start from a young age and be prepared! :D

mikelouis
03-22-2014, 03:01 AM
I think it all depends on the type of business that you are trying to get in to. If the business requires a lot of capital that you can save, then taking a loan will be in order. Manage the money well if you decide to take a loan, be sure that you will have to pay back the money that you loaned.

useruseruser
03-23-2014, 11:51 AM
Its different for each case. Personally , I would save up enough money to pay off the interest instantly and then take out a loan. This would mean I could stick to a specific payment plan and get the loan paid off instantly. I hat debt hanging over my head.

cpefley
03-23-2014, 12:13 PM
Hi.
I have been debating about this with friends for long. Is it better to save up to start a business or to take up a loan?

Saving up is time inefficient, though you avoid the interest rates. Loans on the other hand let you start your project now, though you now have to pay up the interest rates.

What tipping point works for you to decide of either?

I would say that the tipping point was whether or not there is anything proprietary about your business. Is there something that someone else can snatch up quickly and you really need to get ahead of the pack? Then, you should definitely borrow money. However, if you can save up, it will save you money in the long run. If it is an invention, something new, I would definitely start looking for financing.

DomDom
03-23-2014, 02:55 PM
Its different for each case. Personally , I would save up enough money to pay off the interest instantly and then take out a loan. This would mean I could stick to a specific payment plan and get the loan paid off instantly. I hat debt hanging over my head.

I agree, debt is the number one killer of any kind of business!

wandering wildman
03-26-2014, 03:58 AM
I strongly suggest if it is your first time doing this to save closer to 80-20. You have to face the realistic perspective that your business may fail. It will be much easier to move on if you don't have massive loans to pay off.

TheBrit
03-26-2014, 08:00 AM
If your intention is to start a small business, maybe a market stall selling home made/produced products, then using your own cash is the way to go. Should anything go wrong at least you are not saddled with outstanding bank debts.
If the plan is to start a small business with a relatively high start-up cost you will need to do both. Banks in this day and age will not just lend ex-amount of thousands of dollars/pounds. Most will require at least a fifty-fifty split. Fifty percent from you and the remaining fifty percent from them. Even then the bank will require an additional guarantee to safeguard their percentage of the loan and expect the application to be backed up by projected turnover and profit and loss sheets.

Lithium
03-26-2014, 10:45 AM
If you don't have all the money, make sure to save some. Also, don't invest all of them, since you might end up on the streets.

loraanna
03-26-2014, 12:05 PM
I personally debated this issue as well, I wanted to grow my business really fast and I actually
went through the process of getting the loan but at the last minute I got cold feet. I decided that
I would rather save, work freelance jobs and add that to my savings because if my business failed
at least I didnt have a big loan payment over my head.

eagle22
03-26-2014, 01:56 PM
Yeah it's tough to give you a clear answer to this one because it depends on so many factors. Taking a loan can be risky and if you are going to do it you need to ensure you can pay it back in the agreed amount of time. I think your best option would be to save up for a while, and once you hit a certain amount then take the loan. If you save, at least you will have some back up cash to help pay off the loan in case things go bad.

pahagwl
03-26-2014, 02:51 PM
I strongly suggest if it is your first time doing this to save closer to 80-20. You have to face the realistic perspective that your business may fail. It will be much easier to move on if you don't have massive loans to pay off.

I think that you cannot define a particular ratio for the amount of savings to debt, with which you should start off your business. In my opinion, this ratio is dependent on a number of factors which vary from business to business. All I would recommend you is to make calculations for every possible scenario, and choose the one which works out best for you.

DomDom
03-27-2014, 06:30 PM
I strongly suggest if it is your first time doing this to save closer to 80-20. You have to face the realistic perspective that your business may fail. It will be much easier to move on if you don't have massive loans to pay off.

Good post and a good balance, always pick saving first if you can!

ursell
03-30-2014, 11:22 PM
I agree with was said above. If you can save it then do it if not use should do both.

fredkawig
03-31-2014, 01:30 AM
Save and start a business is definitely better. As much as possible avoid loans as it would make your life complicated and disastrous, you might be paying loans for the rest of your life specially with loansharks and banks.

yossup
04-01-2014, 10:21 AM
Is this the first time you're starting a business? Then don't take out a loan. You only take out a loan if you know what you're doing and what to expect. If you have a specific plan and a backup of that plan, and also know the most likely outcomes of each plan, then yes you can take out a loan. If you're a first-time entrepreneur, then you really shouldn't be risking your financial future by taking out loans.

sweetkymom
04-01-2014, 09:02 PM
I say a little of both worlds can help you out. Money from your savings and a loan can start your business now. You don't have to start up big, work your way up that way!

mramirsking
04-02-2014, 11:27 AM
It is probably best to do both - save up and take out a loan. It might be wise to save as it shows to potential creditors that you are serious about the business and can afford the repayments. Look for a specific loan just for businesses as the interest rates might be lower and they might have a mentor to help you plan ahead for your business. The government have some loans available to back up your business.

centralnetwork
04-02-2014, 11:35 AM
Business loans are meant to help your business grow, but I don't think that loans should be used for a start up and much less payday loans, which is often the option of choice for people seeking for a "time-efficient" solution.

In my opinion, I think that it is a better option persuade an angel investor to come along into the venture, or look for partners and sponsorship.

A business that is developed on the foundation of a debt has much less chances to succeed, particularly because the first months of operation involve more expenses than earnings.

emilx_06
04-02-2014, 11:57 AM
I have tried getting a loan as additional capital for our small business and for a while we thought it we were doing great. As time passed by, we noticed that there were days when the business doesn't earn that much and we needed to cut some cost. Later we realized that our loan repayment became much of a hurdle than help. I say to get a loan but make sure to account the times when you have to shell out personal money should anything go wrong in your business. It is a plus however to have your own savings as your capital because you won't need to pay any interest. However, most new ventures start with a loan first as we did with our small business.

businessgurl
05-07-2014, 01:49 PM
Hmm. I think that a loan is a bad idea...why not get an investor? I just think that a loan can be difficult to do, but that depends on the amount. Also, you can find investors if you know where to look. Looking at event conferences (http://jtfoxxlive.com), going to a local chamber of commerce event, and general networking might help you find better options. This is all up to you, but finding all that money might take longer than simply getting an investor.

What does everyone else think?

dbm021974
05-17-2014, 01:29 PM
I have access to multiple lenders and lending stuctures. My e-mail is maymortgageandfinancial@aol.com or call 803-807-6646.

Michael Thompson
05-21-2014, 08:24 AM
I think best thing is to do both. Loan will give you a start to your business but saving will give you relief from too much interest.

ipinos
05-24-2014, 10:06 PM
It is depends on how big your business is. If you start from small it is good to use your own money. However if to go big and risky, loan is a better option. When you go big, registered as ltd and if your business goes wrong you will not be affected. So why use your own money.

mattandshana
05-25-2014, 02:03 PM
justSaying, my advice would be to err on the side of caution, as much as possible. Having said that, I think it all depends on how quickly you want to get your project off the ground and how long it would take to save the required capital. For sure, the best method is to fund your project with your own savings but, if there is a time element involved with its success then, by all means, do what you have to do to make it happen.

Best of Luck,

Matt & Shana

KennethPaxton
09-15-2014, 02:15 AM
It will depend on the situation that what is your position at the time when start the business. Both is important because you totally can't depend on the bank loan because at the time of giving interest you will be unable to pay interest in bulk. Your own capital is also important for you to start a business.

jenniferandrews39
09-18-2014, 12:51 AM
Go for both man.!!!!

suritrendin
09-19-2014, 11:46 PM
Unless you start really small, then saving is enough.

DwightDuncan
09-22-2014, 01:57 AM
The most important thing before you start any business and after starting the business is "MONEY". It seems like a impossible dream to get enough money to start your new business. Well there are thousands of individual in a year who want money to start a new business. As per me for starting a business I think both is important to save or to take up a loan for business. Don't invest your overall savings in business, first star your business in small scale.

SBFO91
11-27-2014, 06:32 PM
Honestly , you need to do both. Its the only way you can acquire balance financially.

jgwhite
11-28-2014, 12:58 PM
When I started my business, I took out a merchant cash advance. I felt like it was easier to pay back then a loan (and much easier to get right away).

Here's a good resource about merchant cash advance (http://nativemerchantservices.com/guide-merchant-cash-advances/).

karnia
11-28-2014, 07:56 PM
I prefer to get another job with good amount of salary and start saving around 20 or 40 percent.

DwightDuncan
12-06-2014, 04:10 AM
According to me saving is a good option if you want to start something. If you are thinking to take loan then you can take funds from some sites online or you can apply in banks for your loan.

Robert01
06-10-2015, 03:03 AM
If you are already rich and saving some money is not a difficult thing to do for you then you should save your money and then start a business or something. But if you aren't, then taking a loan is better. So, it seems that taking up a loan is suggestible for most of the people.

bobsindiastartup
06-10-2015, 06:02 AM
If the business you put the finances from the loan into is viable then you'll bay able to pay it back plus interest in no time at all. Whether you pick a load or to save, look at the element of risk within your venture.

Affinity Loyalty
06-23-2015, 01:33 AM
Both has its own advantages and disadvantages.In taking loan,you have advantage of starting project on time and there would be less waiting time but it has disadvantage of interest that you have to pay to the bank and interest can be high or low depending on the bank.Also,If your project don't result sucsessfull,then,it would become tough for you to return money you owe to the bank.
In saving money strategy,you might take longer time to start your project and you will not have all your resources at a time,so,it may hinder your ongoing project but you will be free from any types of interests,you will not have pressure of lending money someone,and you will work freely.

So,before you decide, you have to think about your project.You should analyse it properly,its outcomes etc.
But i would recommend you to go with your savings.It will teach you some lessons of management.

Best of luck for your future

charles A
10-08-2015, 01:20 AM
hi, dear nice idea of making your own business if you want to take loan go for good loan providers and you also go for both .
for further information about taking loans and your own business you can check this source:
https://fidelitybankofflorida.com/BusinessBanking/SBALoans.aspx

russiwilson
02-09-2016, 12:35 AM
Take a loan is not good idea for start up a business Its better from your savings because you don't need to pay interest if you have savings ....

cogentanalytics
02-09-2016, 05:51 AM
Get a loan then use the savings as a safety net? I think this could work fairly well if you are applicable for a loan but really you should do both as said so many times on this thread ; there is no way your savings could cover all the overheads of starting a business which is where the loan comes in but personal savings are definitely a good start short term but long term finance you need a loan to be able to retain any profit.

suyash
02-09-2016, 06:02 AM
First make a solid business plan, and think before taking loan. In case of loss in your business, how will you able to repay the loan amount.

Solomon Deitch
02-09-2016, 08:40 PM
I'll put it this way: if you take out a loan with high interest, you probably will not make enough to make more than the interest. If you can get a low interest loan (which is almost impossible today, anyways..) it might be worth it, depending on the business plan..

HassleFreeAdvances.com
03-08-2016, 01:13 PM
Figure up the cost of the loan. Not the principal, but the dollars interest.

Now figure up the profit of the business over the same period of time.

If the profit is at least twice the amount as the cost of the loan, then I'd take the loan.

But for this to even be something to think about, you need to see if you can even get the loan. Banks and most people aren't financing start-ups. But if you are talking about Friends & Family, then you are ready to analyze this.

Remember, project cash-flow over a period of time (Ideally, the same period as the term of the loan). Include all projected monthly expenses and NET profit. Include collections and taxes. And don't forget all the startup costs like legal, technology, etc.

Jackie Chan
03-10-2016, 04:23 AM
If you want to save then this will take most time. But if you are in a hurry and want to set up a business soon then load is better I think.

Kevin@sits
03-10-2016, 09:48 AM
I have tried both and I wished I had this advice then which I now have.
1. It depends on the viability of the business - the value of the product or service to the niche.
2. Have you completely tested the niche? If so then you would know if it will make you money to repay your loan in a specific time or if it will provide enough to save and expand.
3. There are good loans and bad loans. A good loan is where the loan pays for itself. A bad loan is where you sweat to pay it back.
So what kind of business is it and what are the results of the niche test?
It's always better to plan big but start small.
However sometimes - very few times - the market is proven to be hungry and the product needs cash to start.
Which is it for you?

HassleFreeAdvances.com
04-20-2016, 10:28 AM
I'm going to make this very simplistic... so please forgive me if I'm doing it too much so. My response is mathematical versus philosophical.

First, you need to start with the following two numbers (percentages):
1) If you save... what is the return on your money?
2) If you take a loan... what return will you make on the proceeds?... then subtract the loan cost from there. take ALL costs and divide by loan proceeds. then annualized that number.

The mathematical answer is that you should take the option that gets you the highest return. But as there is no certainty, you may want to use a rule of thumb (that I recommend) which is that the 2nd number has to be at least twice the amount as the first number.

vamsi12
06-07-2016, 12:57 AM
i think you should do both, half from your savings then half from loan, at least you wouldn't have to pay too much interest..

ThinkingCapital
09-26-2016, 10:11 AM
I agree. You almost always need to do both. The more you save, the less you have to borrow!

ThinkingCapital
09-30-2016, 07:06 AM
It seems like the general consensus is a mixture of both, which makes a lot of sense.

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chinomoreno
10-25-2016, 09:36 PM
Investment is very risky, you should have a back up for it so I have to agree with delusional you need to have both.
If you want to get a loan you must have at least save enough money just to avoid future complication on the business.

johnwilson
11-01-2016, 04:08 AM
you should do both.

shanaeer
03-08-2017, 09:18 AM
I personally believe that if you need money and can't or aren't willing to save up for it, you can try finding venture capital money or launch a crowd funding effort.

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Monte
03-23-2017, 08:23 AM
vaguar:

What you refer to is sometimes known as "bootstrapping". A large number of people start businesses on less than $1,000. I can't recall exactly where I read that, but it makes sense.

Personally, I'd use what I had, and save up before I took out a loan.

Another thing to consider. Every dollar you pay back in a loan is a dollar that isn't profit or going back into your business.

BusinessFundingPro
03-31-2017, 03:52 PM
It's definitely better to save - getting a loan for a startup is extremely difficult since any new business is considered high risk. You might be able to take out a personal loan, but if you want a good amount loaned to you, you have to be a high earner already, and your credit must be good.
Once the business has been established and operating for a few months, as long as you show good sales (10,000+ a month), getting a loan is much easier.
If anyone needs help getting a business loan, let us know: https://www.businessfundingpro.com/
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andrew2510
03-23-2018, 07:07 PM
I would personally only hire someone recommended to me and see if they have past experience. Otherwise you could be in a world of hurt because the adviser doesn't know your business

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Sallydavidson
04-23-2018, 07:07 AM
The best choice in the decision if you are positive about your potential business, is to get a loan. but Just make sure that you can keep paying the loan even if the business doesn't start as well as expected because otherwise, that could leave a big financial problem for you.

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StrategicFinance
05-02-2018, 08:04 AM
It is probably good to keep in mind that you should never put in more than you are willing to lose. If you can allocate a small portion of savings or if you feel confident that you can recover from a lose quickly enough then fund it yourself. If it will require a significant portion of your savings or take too long to recover then share the risk with the bank. Watch out for a personal guarantee required on the loan. Also realize that leverage is an accelerator in both directions. It will boost your success but it can also bust you out quicker.

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ThomasJone
06-04-2018, 05:58 AM
You quite often need to do both. Unless you begin tiny, at that point sparing is sufficient. You need around 30-half of what you need to claim as an aggregate capital on the off chance that you need to advance some cash.

satyendra321
06-05-2018, 01:12 AM
I would, my friend, tell you the basic and main funda for doing a business. That is: 'Never do Business with Your Money"

PaulJFields
06-12-2018, 06:00 AM
I figure you should do both, half from your assets then half from credit, at any rate you wouldn't have to pay too much interest..

DanaBShield
06-12-2018, 06:08 AM
I figure you ought to do both, half from your benefits then half from credit, at any rate you wouldn't need to pay excessively intrigue..

dpkmlm
08-04-2018, 05:06 AM
saving is priority of everyone but there also good option of loan..

The Boss Life
08-06-2018, 02:12 PM
What type of business are you starting?

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09-14-2018, 07:39 AM
You nearly continually need to do both. except you start absolutely small, then saving is enough. You need to have about 30-50% of what you need to personal as a complete capital in case you need to mortgage a few money.
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Save_on_Transfers
12-05-2018, 05:41 AM
If you are planning to start a business. You need to plan ahead of time it includes if you will make a loan or save money and open a business soon. It's very important as well to know your capital.

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12-05-2018, 10:12 AM
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nelsonpicard
12-06-2018, 01:48 PM
It depends on the business you want to start and the amount required to buy the things like stock to sell on day one. It depends on the cash flow needed to make sure you have enough money to pay bills during low sales periods. You will need money or transfer assets to your business to capitalize on it. Banks, city development programs, or even investors, will need to see 20-25% of your investment in the company. At this point, I would say you need both. If you have a plan, understand your sales process, then you can plan the operations and related cost. You will transfer the numbers in your financial planning. The result will be the amount needed to start your business. Remember that a loan helps you leverage your growth. This forecast should be a result over the interest rate you pay. With more information about your business project, it would be easier to give you advice. Hope this helps. Nelson Picard

Dilan
02-15-2019, 03:37 AM
Loan for a business is not bad idea

Tayra
02-16-2019, 08:02 AM
I do not think that loan is a good idea. A loan is a debt pit, from which it is difficult to go. I think it's better to collect money, suffer a bit, and open a business on their own, not on credit. Moreover, there are many ways to make money fast today. I think that under such conditions it is not very difficult to earn on opening a business in the modern world. For example, I almost accumulated enough money to open a cafe, putting on sports. Sports betting is a popular entertainment now. Moreover, if it is done correctly, it brings a lot of money. I do it not just at random. I'm analyze statistics on https://fscore.in . It helps me to make winning rates!!

peterradcliffe
08-05-2019, 01:34 AM
for taking loans for your business saving is important because the bank or any lender asks for your saving then they can give you a loan. try to save amount first then apply for the loans for your business

Walter White1
08-06-2019, 02:50 AM
It also depends on how experienced you are. Its always better to save up if you can in my mind because you know the worth of the money and won't squander it like a credit.i guess it doses not depend on experience because the loan you take and give bake 200 % interest so it's not good and healthy deal

JSturgell
09-02-2019, 08:34 AM
Hello justSaying,

I think the smart approach here would be to identify a debt ratio that you are comfortable with, gather what you have to invest in your business, and then determine what you are comfortable in accepting as liabilities, or ownership and claims from others, such as a bank. So many times people aim to start a business, fail to secure enough capital, and it piddles out because they didn't have the financing available. On the other hand, it is easy once you get a bank's approval nod to over-capitalize, the business doesn't do well, and you are in over your head. A good place to start is an 18 month set of projections. Identify where the money is coming from and then start setting goals. The company's ability to consistently achieve goals or near misses at this point will be the driving factor of whether or not you need to get out after 18 months.

Devidboil
09-21-2019, 11:26 AM
If you are considering a loan, you should weigh the pros and cons. If the installment will eat most of the salary, you will not have enough money left over. You should definitely consult with a financial expert whether it is profitable to take a loan now. If you are looking for finances that you want to invest and increase, you should apply for a loan. But make sure that you, like me, do not have to contact Debt Quest USA in Michigan, a financial debt settlement company.

Moses007
09-23-2019, 07:19 AM
It's better to invest some of your savings & take a loan to start the new business. If it is a small amount needed to invest you can depend on savings.

If you are good at managing your money then you may take the loan to start the business.

Finally it's totally depends on how you manage your investment amount.

jacksonsamy2
10-19-2020, 03:09 AM
A loan is obviously costlier than using your savings in the current time, but in the long-term, your investments are likely to give you higher returns than the amount you end up paying as interest on the loan.

raviseo120
10-19-2020, 12:06 PM
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amelyjcob
10-21-2020, 07:45 AM
Should I get a loan or use my savings?
If you look only at cost, then using savings is the best option. You may receive some interest on your savings but you will find that this will not be very much compared to the cost of a loan. ... So therefore, those that are concerned about the cost of a loan will use their savings first so that they can save money.

raviseo120
10-24-2020, 11:39 AM
thanks for sharing with us

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