| Use my $ or business loan? |
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fd1976
New Member
Cash: $ 0.65
Posts: 3
Joined: 31 Oct 2007
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| Use my $ or business loan? |
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I know everyones situation is different, but:
If I need,say, $100,000 to start up a business, it is advisable to get a business loan or should I "loan" it to the business? I could finance it either through my savings, or use a home equity line of credit. I could then charge an interest rate greater than I am receiving from bank or being charged from the heloc. If I am the owner of the business, I would be responsible for the principle regardless of whether it came from a bank or me, so I think the collateral risk would be the same. Any thoughts?? thanks
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Wed Oct 31, 2007 4:00 pm |
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fd1976
New Member
Cash: $ 0.65
Posts: 3
Joined: 31 Oct 2007
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quote:
Originally posted by coaster
The interest probably isn't tax deductible if you loan it to yourself. In fact, it would create taxable income, wouldn't it?
Tim- Yeah, It would create taxable income. I'm not looking to make money on the loan, I just thought since the risk of repayment was the same, it would be easier rather than taking out another liability. As far as I see, I just would not have my hELOC available for personal use.
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Wed Oct 31, 2007 5:34 pm |
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fd1976
New Member
Cash: $ 0.65
Posts: 3
Joined: 31 Oct 2007
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If I have the money, are there any benefits to having another loan vs. using mine.
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Wed Oct 31, 2007 8:14 pm |
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Apollo
Senior Member
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Joined: 10 Sep 2007
Location: New York
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If you have the cash and don't plan to use it for investments then I would use the cash on hand rather then take out another loan.
Personally, I would ensure enough enough monthly cash-flow from investments which would more then cover the monthly debt payment if I really need to take out a loan.
If you don't plan to use the money and its just sitting in a bank account I would use that.
It is not smart to play it safe but it is safe to play it smart.
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Thu Nov 01, 2007 2:57 pm |
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