Entrepreneur published an article recently in which personal finance expert Dave Ramsey discussed his top budgeting tips for small business owners. One subject that came up in the article was about whether or not it is a good idea to take out a loan to start a small business.
Do I Need to Take Out a Loan to Start a Small Business?
According to Dave Ramsey, in most cases, you should not need to take out a loan to start a small business. The article is written in a question and answer format. Ramsey is asked whether it is ever okay to take out a loan to start a small business or if you should always use cash to avoid racking up debt. Unlike some of his peers, Ramsey does not believe there is such a thing as good debt and, therefore, he does not recommend using a loan to finance opening the doors of your small business.
Instead, he cites a US Census Bureau statistic that says that 60 percent of businesses that are started in the US each year need less than $5,000 to open their doors. As such, he believes that there is no reason to get a loan to start your business and risk saddling your business with a huge debt out of the gate.
Should I Talk to a Lawyer Before I Start a Small Business?
In the following video, New Jersey business attorney Gary Mason explains why it is in your and your business’s best interest to consult with a business lawyer at every stage of your time as a small business owner, including when you start your business, partnership disputes and retirement.