Should I go for a loan to start my business?

Discussion in 'Business Discussions & Plugs' started by tonytune, Dec 9, 2016.

  1. tonytune

    tonytune Member

    Joined:
    Dec 8, 2016
    Messages:
    6
    Location:
    Toronto, Canada
    Hi, I am going to start an aluminum metal working unit in Ontario, Canada. I am planning to rent a warehouse. I don't have the full capital to start it. I am confident, that with my knowledge and the contacts, I will be able to get good business.
    My wife gave me the idea to get a mortgage loan I am not very sure. She should me this page containing the information on commercial mortgages. https://www.butlermortgage.ca/mortg...al-commercial-mortgages/commercial-mortgages/ I may get max 95% of LTV, as I have a good credit score, I can get high LTV.
    But, is getting a mortgage for starting a business a good way of doing things? My wife tells me, it is good as I will be able to get some tax benefits. Is it true? Need your advice to go ahead with the plan.

    Thanks
     
  2. th1b.taylor

    th1b.taylor Member

    Joined:
    Dec 4, 2010
    Messages:
    14,866
    Location:
    SE Texas
    Christian:
    Yes
    I used the 90 day loan to begin my Construction Businesses in the late '70s. I cannot see your projected market earnings and I cannot see your likelyhood to repay the loan. Asking people on the web is one sure method to assure disaster, though.
     
  3. markathome

    markathome Member

    Joined:
    Jan 30, 2016
    Messages:
    432
    Location:
    Alaska
    Don't get a loan to start a business. The sole purpose of a business is to make money, not to borrow money and then be in debt.
    If you need equipment to start the business then start buying the stuff at auctions etc. You will save a ton of money and not be in debt for it.
     
    Edward and th1b.taylor like this.
  4. th1b.taylor

    th1b.taylor Member

    Joined:
    Dec 4, 2010
    Messages:
    14,866
    Location:
    SE Texas
    Christian:
    Yes
    One thing I did not say, you need to be able to survive seven years without making a paycheck if you borrow more than 25% of your start-up cost.
     
    wondering likes this.
  5. wondering

    wondering Member

    Joined:
    Dec 26, 2015
    Messages:
    9,645
    If you're serious you really need an accountant.
    th1b.taylor has given you good advice.
    Also, don't expect to make a profit the first two years, unless you're lucky.
     
    th1b.taylor likes this.
  6. Knotical

    Knotical Staff Member Moderator

    Joined:
    Sep 11, 2012
    Messages:
    5,530
    Location:
    Armpit of California
    Christian:
    Yes
    For one, you should really draw up a sound business plan, if you have not already done so. Second, I would consider going the kickstarter or gofundme routes to see if you can get any funds that way. Getting a mortgage against your house to pay for this venture just seems risky. You may as well approach a bank for a small business loan.
     
    th1b.taylor and wondering like this.
  7. Edward

    Edward Member

    Joined:
    Sep 18, 2012
    Messages:
    9,525
    Location:
    USA
    Christian:
    Yes
    I tend to agree with this. I didn't and wouldn't. I started mine on a shoestring. People will tell you that you need money in the bank and so forth, it just isn't true though (at least it wasn't for me in my trade.

    Ingenuity will take you further than a loan.
     
    th1b.taylor likes this.
  8. Edward

    Edward Member

    Joined:
    Sep 18, 2012
    Messages:
    9,525
    Location:
    USA
    Christian:
    Yes
    If you find yourself getting discouraged about going into business for yourself... remember these two things:

    1. Worldwide, only about 6% of people are business owners. 94% of the people work for someone else.

    2. Even a bad business is better than a good job. (My dad told me that eons ago. I've never proved that statement wrong, even after having been in business for over 30 years.)
     
  9. tonytune

    tonytune Member

    Joined:
    Dec 8, 2016
    Messages:
    6
    Location:
    Toronto, Canada
    A lot of mixed reactions here. I think I should see a financial planner to get a clearer picture. That would be the right step.
     
    th1b.taylor and smaller like this.
  10. reba

    reba Staff Member Administrator

    Joined:
    Dec 23, 2010
    Messages:
    45,944
    Location:
    State of Jefferson
    Christian:
    Yes
    tonytune Ya might see to it the financial planner isn't wanting to sell 'ya a loan....
     
    Christ_empowered and th1b.taylor like this.
  11. JohnDB

    JohnDB Staff Member Moderator

    Joined:
    Aug 16, 2015
    Messages:
    4,375
    Christian:
    Yes
    Actually angel investors are the way to go. They provide the capital and business savvy to make your business a success. They take profits as an investor but that's SOP.
     
  12. sesantek

    sesantek Member

    Joined:
    Mar 11, 2008
    Messages:
    124
    Location:
    Nigeria
    Christian:
    Yes
    Starting a business without money is possible but it requires the application of wisdom and lots of patience on your part. Really I believe loan or debt is not ungodly but it's a weight especially if you go into debt without your eyes open. I will advise you start from wherever and with whatever you want to start with and see if you can bring in investors on board who will be ready to put their money into it.

    However, if you want to go into the way of loans, you should check all the details so that you don't kill the business before it starts.

    God bless you and all the best.
     

Share This Page