Why Personal Finance Is Better Than Taking Loans?

[Good-Guy]

When it comes to conducting any business, there are many things a person usually considers. There are many thing such as labor, machinery, place, equipment, plans, business strategies, etc. However, one of the most important things is capital when it comes to starting any form of business. In fact, I must say that capital is just like roots of a tree. It is not possible for any tree to grow its branches, flowers, leaves, trunk, etc when it does not have roots. When the seeds of any plant or planted into the ground, it eventually forms roots.

These seeds are responsible for the first step of growth of any plant. I must say that capital is just like the seeds of business. The capital is just like root. It is not possible for you to eat fruit (i.e. profits) until or unless you plant the seeds of any business (i.e. capital). Many people often take loans to start business, but I believe that personal finance is much better than that because personal finance never involves the risk of being in bad debt. Apart from that, personal finance also never actually require you to pay interest. So, what are some of other benefits of using personal finance to start business over taking loans?

 

[Kingsley]

There is certainly no doubt that using one's personal finance to run a business is far better than using a loan to run a business. One of the major challenge of using loans mostly as a start up is that the business owner has not really gathered enough experience on how to manage the business. Hence if the business should hit a major challenge and it is unable to survive, then the owner of should business will become bankrupt and it will be difficult for the owner of such a business to payback such a loan.

So I do encourage people to always look for ways to get themselves working first and gather enough money and experience before embarking on their personal business. One major advantage of running a business with personal funds is that the tension and pressure one would have faced on running the business on loans. And people as we know do not make good decisions when they are under pressure. This is whay using your personal fund will help you do to aviod unnecessary pressures. Then it will aviod you the opportunity of marketing sound business decisions. And the business will make good profit that will not be sucked up by interest on loan.

 

[sincerem]

The loan repayment interest is something that isn't worth but, some are simply set high. Meaning, you pay excessively as repayment interest covering the loan. It is not good enough to start the business with loan especially as a flat beginner, it will take some time for the business owner to generate such capital back and paying back the loan. Especially when the loan is a short term loan, a long term loan is quite better than going over to a short term loan with high interest rate. The probability of the person managing a business with a loan with high interest rate is just slim to make it far in that business. It can only take a virtue of business luck if the person got experience alot before he or she even thought about the business. Still I would not still advice anyone concerning starting a business with a loan, unless nthe interest rate is very much okay and the repayment s a long term option and not just within short duration of time. At least, that's where the new entrepreneur can operate and having a free mind of running a business without any thinking of fear of collapsing.

 

[Abigael]

I totally agree with you that capital is the foundation of any business. Therefore, you should plan the business well so as to know how much capital you need. That being said, there are many sources of getting that capital.

Most people may go for loans to start a business. But since business startups are so risky, you don't know if you will earn profits to pay back the loan. That is why personal financing becomes a good option.

The good thing with personal financing is that you won't have to be in so much pressure and anxiety to pay back the loan. Those emotions may hinder your performance in running the business.

 

[Kendy]

I totally agree with you. It is impossible to eat fruits when the seeds is not productive. Capital indeed is a great priority when starting a business. To me, I will like capital to a fuel, a fuel is very necessary in starting or making a car to function. No matter how beautiful a car is, when the fuel is not filled or gets dried up, the car will automatically cease to move. Now, the fuel is the capital, which is needed to boost the speed of the business and the beautiful car is the high productivity of the business. In setting up a business, the speed of how the business owner wants the business to grow should be ascertained but in all sincerity, the available capital or funding is the first key of how the growth will be determined. Here, the number of employees would be fathomed, the equipments, the location and other necessities would be budgeted. In all of these, the source of the capital can either promote the business growth or dwindle it as well. If the source of the capital is gotten from loans, it would be so pressurizing but on the other hand, it could make the business owner take his business passionately but personal finance is still the best because of security and it is less pressurizing.

 

[Yhubee]

I agree with you on this. Personal finance is a preferred source of capital when starting a business compared to loans as a source. The risks of being in debt is avoided and the business owner can steadily enjoy the profits he or she makes from his or her business.

 

[Skysaint]

Personally, I would choose the personal finance method over taking a loan. To be honest, starting your business all by yourself without borrowing money from anybody is better in all ramifications than taking loans from an external source to find your business startup.
Business is something you can't actually predict because most times, what we imagined is not what might play out for us when we start the process. When I was a newbie to earning money online, I made a personal principle to earn about $5 from completing different tasks online and I imagine the money I should be making at the end of the year but what happened, I rarely even do come online let alone visiting my various earning sites due to school activities and the stress that comes with it. So in the same way, you can't predict the outcome of your business when you've not even gone into it, so it will be unwise to take such risk from a capital that you borrowed from an external source.
The best way will always be funding the business all by yourself and if you must take loans then be sure to have a side plan on how you will make repayments before the timeframe for it elapses. And the side plan shouldn't in any way be connected to your business.

 

[Sotherefore]

There are so many reason why personal saving is better in establishing a business than loan , for me personally one of the most important reason why I do not like getting a loan to start up anything is the fact that getting a loan comes with so much stress. You won't relax in anything you are doing when you are doing it with a loan whereas if that was your capital you could easily relax and concentrate on how to grow your business , but here with the loan you will be rushing on how you could be able to raise the needed capital to repay back what you have collected.

It is even more safer for you to have a business failure with the capital you have raised on your own than to have it with that you have gotten as a loan because the one from loan is what you have to pay back even if the business is not going as you have planned .

A lot of people are always depressed to the point of even committing suicide when they are not able to pay back the money they have collected because of business failure or other reasons .

 

[Augusta]

You have stated the whole idea about personal finance, you use your own saved or stored money to finance or start your business which to me is the best idea when it comes to funding a business.

with personal finance you would be worrying about repayment periods, you wouldn't be talking about high interest which comes with loan acquisition. The most important is that you would be having rest of mind because taking a loan comes with it's worries and until you are able to make and complete the payment you might not have rest of mind. So the best bet will be to get your capital from your personal savings or you ask friends and family to I contribute money for your capital. Even if it will means you paying back to them at least it might take while for the repayment and you might not need to pay any interest.