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Old 04-16-2015, 02:03 PM
 
Location: Los Angeles (Native)
25,303 posts, read 21,337,478 times
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There is a lot of talk these days of the cost of college education and how students will go to college and still not be able to support themselves or find " good jobs "

Imagine if the government made it as easy to get a loan to start or buy an existing business rather than going to college .

I think this kind of program/ policy would create more of an economic impact than giving the money to a student where the graduate might or might not find a job .

I know there are SBA loans but there seems to be a lot more red tape and they seem much more difficult to obtain versus student loans , and they seem to want experience collateral etc .

As far as I know there are no programs like this .

Of course not every young person will want to do this but if it was offered to young people with an interest in entrepreneurship I feel it would be a great investment .
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Old 04-17-2015, 07:21 AM
 
9,778 posts, read 7,592,334 times
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There is such a high failure rate for businesses, I can't imagine that an 18 - 20 year old with no work experience at all, no education, no assets could possibly run a profitable business with enough extra funds each month to pay back a loan.

Most of us started our businesses with no loans, after years of experience in related fields. Even then, many fail.

I think it would end negative for most borrowers, with their businesses closed and saddled with all that debt to pay back.
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Old 04-17-2015, 07:50 AM
 
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,227 posts, read 80,425,063 times
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Quote:
Originally Posted by KaraG View Post
There is such a high failure rate for businesses, I can't imagine that an 18 - 20 year old with no work experience at all, no education, no assets could possibly run a profitable business with enough extra funds each month to pay back a loan.

Most of us started our businesses with no loans, after years of experience in related fields. Even then, many fail.

I think it would end negative for most borrowers, with their businesses closed and saddled with all that debt to pay back.
I have to agree. I started my business with $80k in savings, and it served us well for 16 years. During that time I saw 4 competitors within a mile (franchises) come and go within 6 months, despite their claims that "anyone could run the business". Those businesses with the best chances for success are those where the owner has years of experience in that kind of work, and the experience and/or training to handle managing employees, understand budgeting, and be familiar with federal, state and local employer, tax, and licensing laws.
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Old 04-17-2015, 08:21 AM
 
41,111 posts, read 25,611,648 times
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Quote:
Originally Posted by Hemlock140 View Post
I have to agree. I started my business with $80k in savings, and it served us well for 16 years. During that time I saw 4 competitors within a mile (franchises) come and go within 6 months, despite their claims that "anyone could run the business". Those businesses with the best chances for success are those where the owner has years of experience in that kind of work, and the experience and/or training to handle managing employees, understand budgeting, and be familiar with federal, state and local employer, tax, and licensing laws.
LOL, you got to love that "anyone can do it" or "you didn't build that" attitude. A few business can be started on a shoe string but that requires that people have the drive and financial understanding. I started with a mix but also understood that once the money started coming in, the money had to be put right back into the business or put aside. It's a good thing I set money aside because the government takes a huge chunk (back to working for nothing). I can see how people thinking they are finally making money can get themselves into debt with the IRS.

My advise to anyone starting or running a business is get a bookkeeper / CPA to organize business finances and to keep you in line with what portion the government takes and when to pay it.
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Old 04-17-2015, 10:51 AM
 
Location: Los Angeles (Native)
25,303 posts, read 21,337,478 times
Reputation: 12313
Quote:
Originally Posted by KaraG View Post
There is such a high failure rate for businesses, I can't imagine that an 18 - 20 year old with no work experience at all, no education, no assets could possibly run a profitable business with enough extra funds each month to pay back a loan.

Most of us started our businesses with no loans, after years of experience in related fields. Even then, many fail.

I think it would end negative for most borrowers, with their businesses closed and saddled with all that debt to pay back.
It would probably be best to have some kind of requirements. Also if it was similar to student loans for college, you would have to pay back the loan after graduation rather than during.

There would have to be some type of infrastructure, at the least solid online courses or tutorials as well as some mentors and support system.

Regarding defaults, many student loans are in default. I think many would be shocked at the rates.

Over a quarter, 27% of student loans are in default!

With Student Loans Equal to All Income Tax Collection, 27% are in Defaults

This wall street journal article from a few days ago claims the number is even higher than that..
The Student-Loan Problem Is Even Worse Than Official Figures Indicate - Real Time Economics - WSJ

Pretty scary stuff.
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Old 04-17-2015, 10:55 AM
 
18,494 posts, read 15,471,998 times
Reputation: 16163
Quote:
Originally Posted by jm1982 View Post
There is a lot of talk these days of the cost of college education and how students will go to college and still not be able to support themselves or find " good jobs "

Imagine if the government made it as easy to get a loan to start or buy an existing business rather than going to college .

I think this kind of program/ policy would create more of an economic impact than giving the money to a student where the graduate might or might not find a job .

I know there are SBA loans but there seems to be a lot more red tape and they seem much more difficult to obtain versus student loans , and they seem to want experience collateral etc .

As far as I know there are no programs like this .

Of course not every young person will want to do this but if it was offered to young people with an interest in entrepreneurship I feel it would be a great investment .
Would you also make them non-bankruptable just like student loans?
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Old 04-17-2015, 11:01 AM
 
Location: Los Angeles (Native)
25,303 posts, read 21,337,478 times
Reputation: 12313
Quote:
Originally Posted by ncole1 View Post
Would you also make them non-bankruptable just like student loans?
I'll have to form a committee to consider that question!

I think it's interesting that the default rate for peer to peer lending services like lendingclub is much lower than the default rate for student loans.

Default Rates at Lending Club & Prosper: When Loans Go Bad
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Old 04-18-2015, 01:09 PM
 
Location: North Idaho
32,529 posts, read 47,597,720 times
Reputation: 77902
Quote:
Originally Posted by petch751 View Post
LOL, you got to love that "anyone can do it"......
Anyone can do it. But part of starting a successful business is all the study beforehand. You have to learn how a business works and how the economy works. You have to figure out where the income will come from and how the bills will be paid. Then "anyone" will have to work their butt off to get the business up and running.

People who dream and don't learn or study will usually fail, but it is not because it is a lie that anyone can do it. The failures are from lack of effort and lack of knowledge (which is also due to lack of effort).
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Old 04-18-2015, 01:11 PM
 
Location: North Idaho
32,529 posts, read 47,597,720 times
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Incidentally, the government does give out federally backed small business loans and there is grant money available for starting a small business. Part of starting a business is learning about what money is available and where.
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Old 04-18-2015, 01:29 PM
 
18,494 posts, read 15,471,998 times
Reputation: 16163
Quote:
Originally Posted by oregonwoodsmoke View Post
Anyone can do it. But part of starting a successful business is all the study beforehand. You have to learn how a business works and how the economy works. You have to figure out where the income will come from and how the bills will be paid. Then "anyone" will have to work their butt off to get the business up and running.

People who dream and don't learn or study will usually fail, but it is not because it is a lie that anyone can do it. The failures are from lack of effort and lack of knowledge (which is also due to lack of effort).
Or lack of knowledge of the importance of knowledge.

Some people are, simply put, naïve. Do we want them to end up drowning in debt?

Also, even with competence, it is not risk-free - arguably, it is riskier than borrowing to invest in the stock market, because at least with the latter you have diversification.

You've heard the saying "never put all your eggs in one basket". It should go without saying that you should not put more than all your eggs in one basket (all your eggs, plus some of someone else's, which you promise to return to them)!
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