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Ask Dave

Quick Payoff

James thinks he can borrow 75 grand to open a bakery and then pay it off in six months. Dave says that nothing is sure in business.

QUESTION: James wants to borrow $75,000 to open a bakery and can pay it off in six months. Is it acceptable to borrow money in this case?

ANSWER: You may pay it off in six months, or you may never pay it off. One thing is sure about business, and that’s the fact that nothing is sure. You’re assuming that your new business will be profitable enough to do that, and that’s dangerous. Don’t go $75,000 into debt to start a business. Last year, 62% of small businesses started with $5,000 or less in debt. It can be done. Buy used equipment, or even open this thing as a part time deal until it grows.