Reasons Why You Should and Shouldn’t Get A Loan for Your Business

Starting a business and maintaining it is challenging to begin with, and what makes it even harder is having to manage financial issues. Being the owner means that you are constantly thinking of how to maintain the flow of money. Sometimes, you may think of getting a loan to ensure that there is enough bulk to stay on the economic timeline that you have pre-set. However, you may become a bit skeptical because of the confusing opinions from fellow businessmen. So, it’s better to have all the facts laid out before you whether they are positive or negative to end the hesitation.

Why are Loans a Bad Idea?

Downsides exist in almost everything because perfection is a far-fetched hope. The reasons behind avoiding loans are either because of the lender or the circumstances surrounding the request. It is critical to understand the consequences of dealing with either banks or non-banking financial organizations when you are borrowing money because sometimes it can lead to bankruptcy or even jail time.

Credit History-Dependent

Banks rely too much on your credit history. If you have no previous credit, they will make it impossible for you to get the loan. They will request tons of papers and guarantees that may not even have and then you may be rejected in the end after wasting a lot of time that you could have used to get money from another source.

A Loop of Debt

Unfortunately, sometimes you don’t reach the goal that you built your dreams on and you find yourself unable to pay the loan you took on time. So, you may consider getting another loan to pay off your debt. That cycle may never stop, and you will find yourself inside a loop that you cannot get yourself out of. You have to break it and find alternatives or you will end up going bankrupt and become at risk of losing your assets.

Long Processing Time

You may waste a lot of time searching for a broker or trying to convince a bank to give you a loan, especially if you are just starting a small business and you need the money as soon as possible. If you take a quick look at, you will learn that there are various non-banking business lenders that can be processed within a very short period. If you are good enough at persuasion, you can pitch your business idea to one of them and maybe they will give you the amount you need when you ask for it.

How Can Loans Help?

There is a bright side to loans as they can be beneficial if you know when and how to use them. Sometimes, even if you have the money, it’s better to take out a loan or look into po financing companies rather than risking going into the red by spending all the money you have in the bank.


Any business starts with an idea and a solid plan that will need capital to be put in motion. A lot of creative thought gets swept under the rug due to the lack of funding. So, taking a loan can give your business the capital it needs to start kicking. You can pay off the bank with the money you are going to make, and you may even gain profit within the first few months.

Gives Stability

You don’t have to keep looking over your shoulder and keep questioning the survival of your startup. It will help reduce your anxiety and save you the headache of a financial crisis. If you have a clear mind, you will be more productive. Also, you can use the money for marketing while keeping the profit to yourself so you can use it if things went downhill.

Allows Growth

You need to go for periodic expansions to cope with the ever-growing market. You will be left behind if you stay where you started without trying to be open to new demands and changes. Also, sometimes a project needs better equipment or more manpower to expand, and accordingly, you may want to seize the day and accept it. Those opportunities are hard to come by and to be able to buy the necessary needs, you may have to get a loan if there isn’t enough cash saved.

Nobody said that starting a business is easy. It is even harder to get a loan and pay it on time while gaining some cash. Your idea should be bulletproof and you should be able to convince lenders that their money is in safe hands. Also, knowing that a loan is a double-edged weapon, will help in keeping you alert and make you calculate every step and not jumping headfirst into the lap of any bank.

Written by George K.

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