Business credit by taking out a private loan.

Possible to have a business credit

Possible to have a business credit

If you have business plans and need business credit, it is also possible to see what you can do with a private loan.

This is often how sole traders and small entrepreneurs finance their startup, namely by investing a loan that is actually intended for private purposes on a business basis. In many cases the dividing line between business and private life is very thin, making this way of investing understandable.

For example, if you start for yourself while you are still employed, you will soon take out a personal loan based on your fixed salary, even if you intend to use the purchased good for business later. Afterwards it is never a problem to officially bring private goods into your store and put them on the inventory list. It is therefore understandable that you first look at a personal loan.

Consider the pros and cons

Consider the pros and cons

However, when you borrow privately with business motives, you should always calculate the pros and cons. And watch out that your business inspirations do not linger as an expensive hobby. Someone who works in a supermarket, but uses his permanent job as the basis for a loan for the purchase of a professional photo camera because he or she aspires to a future as an independent photographer, will initially be able to get the loan and pay off, but it seems I am told that this person will not give up the permanent job until the income from photography is sufficient to pay off the loan and to pay for the rest of your daily life.

Private loans from family members can and are often used for business purposes. You then discuss the purpose of the loan extensively with your family from which you borrow the money and they can lend it to you as an investment in your company.

If you own a home with surplus value, this is a private asset, but in consultation with the mortgage provider it is often also possible to cash in the surplus value of your home and to finance a business purpose with it. That way you can use the surplus value as business credit.

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