Is it worth taking out a loan to open your business?
Credit can be a strategic tool to get a company off the ground, but it requires planning, financial analysis and careful choice of financing line so as not to compromise the future of the business. Working capital, purchase of equipment and operational structure are part of the challenges faced by those who want to undertake. And, often, the money available is not enough to put all the plans into practice.
In this scenario, taking out a loan can be a viable alternative to starting or accelerating the growth of a business. However, before taking out credit, it is important to understand when this decision makes sense, what precautions to take and how to choose the most appropriate modality for the company's reality.
When is it worth taking out a loan to start a business?
This alternative can be a good solution when the resource will be used to generate revenue, improve productivity or expand the company's operations. The problem arises when credit is used without strategy or to cover recurring expenses with no prospect of return.
What to evaluate before seeking financing
- Volume of capital required for the business;
- Destination of the resource;
- The time in which the investment can bring a return;
- Existence of financial reserves for emergencies.
Ideally, credit should help boost the company, and not become a burden on cash flow in the first few months of operation.
Why is the business plan important?
It works as a strategic map of the company, helping the entrepreneur to understand costs, opportunities, risks and financial projections even before opening the business. A well-structured plan should include:
- Estimate of initial investment;
- Calculation of operating costs;
- Revenue projection;
- Required working capital;
- Market and competition analysis;
- Definition of financing sources.
Another important point is to indicate where the money will be invested. Investments in technology, equipment, inventory or commercial expansion tend to generate returns more quickly than expenses without a direct impact on the operation.
How to choose the best loan to open a business
There are different types of credit available for entrepreneurs, from personal loans to specific lines for companies and micro-entrepreneurs. The choice depends on the entrepreneur's profile, the available guarantees and the financing objective. The most common options are:
- Credit for working capital;
- Loans for micro and small businesses;
- Anticipation of receivables;
- Corporate credit;
- Financing with property guarantee.
Credit with real estate guarantee usually offers lower rates and longer terms, precisely because the property acts as a guarantee for the operation. At Inter, this product is an alternative for those looking for more competitive conditions and longer payment terms to invest in their own business. Furthermore, the financial institution offers other loan possibilities for your company, such as:
- Pronampe;
- FGI Peac;
- Advance of receivables;
- Home Equity.
Be careful not to turn credit into a problem
Taking a loan without planning can compromise the company's financial health right at the beginning of the operation. Therefore, some practices are important to maintain business balance.
- Avoid combining personal and business finances;
- Do not use credit for unnecessary expenses;
- Monitor cash flow constantly;
- Negotiate rates and conditions before signing a contract;
- Stay focused on initial planning;
- Limit the cost of debt to a sustainable portion of cash generation.
A rule widely used by experts is that the annual cost of debt does not compromise more than 20% of the company's expected cash generation. Loans can be an important ally in transforming projects into reality, but the success of the operation depends on the combination of planning, financial organization and strategic use of credit.
Source: CNN