I may not be a Warren Buffet or the likes but this is my honest view from the little may inconsequential business experience.
Starting and running a business with the hope of growth and expansion may be the next sweetest feeling on earth. As a matter of fact, most beginners see themselves making a billion in less than a year from a fifty thousand Naira investment, this excitement more often than not pushes one into taking risks and signing pacts without crossing the Ts. We find it safe to assume that money at hand is the only hindrance to more money.

Each loan has it terms, and most businesses require that some amount of money be retained in it once started to maintain growth. Unless you are already a Dangote who can afford to default and not suffer losses by way of incarceration and confiscation, don't take that loan.

REASONS:

1. Like stated earlier, if you invest 50,000 in a business, to power that business to growth, you may need to have at least fifty thousand naira at all times to do so. with most loans you make remittances, sometimes way above your income as a start-up and before long you discover you just collected the money to make them richer. Ever wondered why some small businesses fail?

2. Interest rates are killing:
In the absence of formal structures to lend to budding entrepreneurs, the informal sector has this cut-throat Shylock like system that would kill your dream.
I will tell you my personal experience.
I had this noble idea I was certain would give me money and was all out to invest, but cash was a challenge. Personally, I am the type that would hardly beg or depend on someone, so instead I broached the idea to a friend to see if he knows how I could access a loan from the informal sector with the bank not being an option, so he introduced me to one and the way it was painted, the only factor that stopped me from getting it instantly was a guarantor which I sufficed wouldn't be a problem. According to him, I was to make a daily return of forty naira per 5000, it sounded cool until I did the maths and discovered I was supposed to return a total of twelve thousand naira in 30 days if I go for a 50,000 naira loan and about 24,000 for a 100,000 naira loan. and this is only in interest as it does not in any way mean I have paid part of the loan and I would have to keep paying same until the loan is separately paid for to the last kobo. Check it out friend, I would have to make a 100 bulks a week in profit to be able to bay that much in interest and still remain in business, itherwise you all will have to pay me a visit in detention as those guys don't smile with their money.


3. You need peace of mind.

Starting a business is not a cakewalk, to remain in business, you need to be in a perfect state mentally, taking a loan will deny you just that. When you take a loan, it automatically means someone has paid for your peace of mind and can use it at will especially if you are someone like me who'd be worried about my inability to keep to terms. Believe me, you don't need that as a beginner.

Alternatives:


1.Getting Your Relatives To Help out.
This is very difficult especially in these times when people would rather have you wash their cars for a plate of porridge and a carton of alcohol but will hardly give you 200 naira to transport yourself to a job interview. but if you successfully get a little cash from relatives invest with it, and grow from there.

2. Get a Partner
Don't be selfish, get someone as passionate as you are in the line of business and merge resources. However a concrete arrangement should be reached regarding roles and benefits.

3. Sell off Luxury Items
Sell of those gadgets you don't need, they can always be replaced when your business booms. Besides technology keeps evolving, meaning you can get even more sophisticated ones when you hammer.

#My2naira
Comments and criticisms are most welcome as we are all learners.

Nice tips you have here.

thanks op..this helpz

Dotmax53:
thanks op..this helpz

you are welcome

This is informative, thanks Op. Comparing fundraising and business loans: http://www.practicalbusinessideas.com/compare-fundraising-business-loan/

mcdokwe:
I may not be a Warren Buffet or the likes but this is my honest view from the little may inconsequential business experience.
Starting and running a business with the hope of growth and expansion may be the next sweetest feeling on earth. As a matter of fact, most beginners see themselves making a billion in less than a year from a fifty thousand Naira investment, this excitement more often than not pushes one into taking risks and signing pacts without crossing the Ts. We find it safe to assume that money at hand is the only hindrance to more money.

Each loan has it terms, and most businesses require that some amount of money be retained in it once started to maintain growth. Unless you are already a Dangote who can afford to default and not suffer losses by way of incarceration and confiscation, don't take that loan.

REASONS:

1. Like stated earlier, if you invest 50,000 in a business, to power that business to growth, you may need to have at least fifty thousand naira at all times to do so. with most loans you make remittances, sometimes way above your income as a start-up and before long you discover you just collected the money to make them richer. Ever wondered why some small businesses fail?

2. Interest rates are killing:
In the absence of formal structures to lend to budding entrepreneurs, the informal sector has this cut-throat Shylock like system that would kill your dream.
I will tell you my personal experience.
I had this noble idea I was certain would give me money and was all out to invest, but cash was a challenge. Personally, I am the type that would hardly beg or depend on someone, so instead I broached the idea to a friend to see if he knows how I could access a loan from the informal sector with the bank not being an option, so he introduced me to one and the way it was painted, the only factor that stopped me from getting it instantly was a guarantor which I sufficed wouldn't be a problem. According to him, I was to make a daily return of forty naira per 5000, it sounded cool until I did the maths and discovered I was supposed to return a total of twelve thousand naira in 30 days if I go for a 50,000 naira loan and about 24,000 for a 100,000 naira loan. and this is only in interest as it does not in any way mean I have paid part of the loan and I would have to keep paying same until the loan is separately paid for to the last kobo. Check it out friend, I would have to make a 100 bulks a week in profit to be able to bay that much in interest and still remain in business, itherwise you all will have to pay me a visit in detention as those guys don't smile with their money.


3. You need peace of mind.

Starting a business is not a cakewalk, to remain in business, you need to be in a perfect state mentally, taking a loan will deny you just that. When you take a loan, it automatically means someone has paid for your peace of mind and can use it at will especially if you are someone like me who'd be worried about my inability to keep to terms. Believe me, you don't need that as a beginner.

Alternatives:


1.Getting Your Relatives To Help out.
This is very difficult especially in these times when people would rather have you wash their cars for a plate of porridge and a carton of alcohol but will hardly give you 200 naira to transport yourself to a job interview. but if you successfully get a little cash from relatives invest with it, and grow from there.

2. Get a Partner
Don't be selfish, get someone as passionate as you are in the line of business and merge resources. However a concrete arrangement should be reached regarding roles and benefits.

3. Sell off Luxury Items
Sell of those gadgets you don't need, they can always be replaced when your business booms. Besides technology keeps evolving, meaning you can get even more sophisticated ones when you hammer.

#My2naira
Comments and criticisms are most welcome as we are all learners.

It has always being my take that seeking loan for early startup is a bad idea.

I don't agree with you.micrifinance bank is the best place for startup.i have taken loan there many times and it's ok.

amp01:
I don't agree with you.micrifinance bank is the best place for startup.i have taken loan there many times and it's ok.

if you read well, you'd note my inferences are from informal lenders which are more flexible than the so-called micro finance banks. too many people hardly can access loan from the banks.

amp01:
I don't agree with you.micrifinance bank is the best place for startup.i have taken loan there many times and it's ok.

micro finance can hardly give startups

especially with their condition of saving for upto six months with them, if I had such savings, will I be asking them for a loan?

warrenweste:



micro finance can hardly give startups

mcdokwe:
especially with their condition of saving for upto six months with them, if I had such savings, will I be asking them for a loan?

exactly u spoke my mind,whats the essence of saving up to 6months when u need a fast fast credit

mcdokwe:
if you read well, you'd note my inferences are from informal lenders which are more flexible than the so-called micro finance banks. too many people hardly can access loan from the banks.

Informal sources is not good for startup.they will not understand when you can not meet up so times.their interest is always high,10% per month; and micrifinance will give 2% per month.

I used to have sense o