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Borrowing for a Business Venture

Aug 31, 2007
There is not much difference between having a baby and staring a business. In the initial years it will require constant attention. As the years go by, you will have to nurture and sustain it. Your aim should be making it self-reliant within the span of a few years.

Yet, as I have already mentioned, it will definitely be tough initially. You cannot afford to shirk your duties as an entrepreneur in the first few years. You will have to work very hard, sometimes round the clock, in those early years of the venture. Deals will not come easily and you will have to decrease your cash outflows. This will require you to spend much time and effort in looking out for clients to work with you.

The initial years will also require you to invest a great deal. At times the money that you require may end up coming out of your wallet. You will feel the pinch irrespective of whether your business is a sole trading concern or a partnership.

Sometimes, if money is required almost at once, the fastest way to meet that need would be to borrow the amount from the owner himself. Thus, the business person will advance the required amount from his own savings. This will be treated as a business loan which the organization will have to settle once revenues start flowing in. This is a popular choice and a great option for many smaller businesses when money is needed.

However, the convenience of this method includes a disadvantage. If the business continues to borrow from the owner, there could come a time when the entrepreneur has no more to invest. This might definitely lead to failure to some extent.

Alternatively, you could apply for a term loan for your business. The advantage of this is that it has a limit. This would require the business to stick to its given budget. On the other hand, a major negative of this mode of borrowing is that this has the tendency of being expensive. And one point to remember is that the interest that you pay on the loans is subject to taxes.

Yet another way of providing for your business during the early years is by securing a business credit card. If you find a credit cards that's cheap, you could end up saving on a lot of money. Moreover, with the hundreds of credit card rewards that are available today, you could be saving a lot on the expenditure of your business. So, if your nascent business needs cash, you should find some of the latest credit cards worth your while.
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