This article is for those who have deep questions regarding using loans to start a business in their minds. Questions like can I use loan to start a business, or is it safe to use loan to start a business, or is loan a good thing to start a business with? In this post, we’ll chronicling and divulging run away from loans in starting your business: why you shouldn’t use a loan to Start your business in Nigeria.
Run away from Loans in Starting your Business: Why you shouldn’t use a Loan to Start your Business in Nigeria …
There are a couple of reasons you should run away from loans and not consider to use it to start up your business. Let’s look at the reasons:
1. Loans have Interest Rates and are Expensive
Loans have interest rates and are expensive to maintain. You should know this. You can source for capital for your business from other avenues aside from loans to make it cheaper for you. With loans, you not only struggle to make your business profitable and sustainable, you also have to think of repaying your loans with the interest rates attached to it. This makes running your business more expensive, putting further pressure on you and the business.
2. Starting a Fresh Business can be Risky and Uncertain
The second reason you should know is that starting a fresh business can be risky and uncertain. Thus, therefore, you shouldn’t put more pressure on yourself by taking loans to start a business. There are possibilities that businesses fail, and in case it happens, there won’t be any other avenue to repay your loans.
3. No Solid Idea about the Profitability and Success of the Business
The third reason is that you don’t even have any solid idea of the profitability and success of your new business. You don’t know if it will become profitable, or not. Thus, you shouldn’t just rush into taking loans for the business you haven’t studied or learned properly.
4. Harsh Business Environment and Economy
In Nigeria, the business environment and economy in pretty harsh. Doing business in Nigeria can be pretty problematic. Therefore, it is not in this type of business that you’ll come and invest a loan in. It is rather too risky.
5. Reduces your Profit and Sustainability Level
Due to the interest rates of loans, which can sometimes be very high, taking loans to start your business can reduce your profit and sustainability level. In case the business becomes profitable for you, or has chances of becoming profitable, it can ruin your chances of making profits or building a sustainable business.
Our Verdict: What you should do about taking Loans to start a Business in Nigeria …
You don’t need to take a loan to start a business in Nigeria. You have to source for capital for your business from other areas or options. The idea of taking loans to put in your business is when you must have built the business to be profitable, and then you take loans for the business’s expansion and growth.
However, you should note that you can only take loans that aren’t worth more than 20% of your business worth; by this way, you can easily repay any loan you collect.
Conclusion
This is it on run away from loans in starting your business: why you shouldn’t use a loan to start your business in Nigeria.