Current Events > Why would anyone voluntarily take out a business loan to open a business?

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A guy I knew in my childhood who had rich parents who just opened a business a few months back told me that he got his start this way

Uh dude... why would he need to take out a business loan if he has rich parents? Cant he just ask them for the money to open it?

I thought business loans are only for broke ass people who cant afford to open it otherwise?

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Maybe he doesn't want his parents to take the hit if his business doesn't work out
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lol the parents were loaded. pretty sure the hit would have been minimal.

or he could have worked odd jobs here and there for a few years to save money to start his business

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Businesses take loans all the time, even highly profitable businesses. The idea is that the interest they pay on the loan is lower than the return they expect get on their investment by running the business. Also many businesses will have a line of credit or bank financed receivables to manage the timing of cash flows.

Also the parents probably don't want to expose their assets to possible default.

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So... you ask why anyone would then use the one example of a person that doesn't have to?

Stupid.

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If you take the business loan out against the business itself, then if it doesn't take off you can just fold the business and declare it liquidated.

If you use your own money, then you're potentially risking your own money LOL

Is this a troll topic

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ArchiePeck posted...

If you take the business loan out against the business itself, then if it doesn't take off you can just fold the business and declare it liquidated.

If you use your own money, then you're potentially risking your own money LOL

but wont that kill your credit? if you fold the business and default on the loan?

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bump

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