Imagine doing what you love every day and earning your living from it. What if you could spend your days working on that passion project? What if you can fill your calendar with tasks that you truly enjoy? Dreaming of writing a novel? Planning to be the CEO of a startup for an innovative app?
Unfortunately, not everyone can afford to pursue these things. Thankfully, you can take out a loan to get you started on these plans. However, just because you have the money to make your dream come true doesn’t mean it will.
To help you decide whether to take out a loan from legitimate money lenders for your passion project or not, here are some things to consider:
If It’s A Business, Do You Have A Plan?
Being passionate about something would not automatically mean you would be successful in that venture. Realistically, you should be able to translate your passion into something profitable if it involves setting up a business. Be clear about who you are, your products or services and develop a brand. Be clear about who you want to serve and the people you want to reach through your talent and skills.
- When coming up with a business plan, ask the following questions:
- Is your business idea feasible?
- Will customers be looking for the product or services you plan to provide?
- How will you differentiate yourself from the thousands of other things vying for the attention of your target market?
Answering these questions will give you a good idea of how you’ll run the financial side of your business.
How Do You Plan to Spend the Loan Proceeds?
Before you submit your loan application, do you have a concrete and detailed plan on where the money will go? This is crucial, especially if you want to sell products or services. Otherwise, you might spend your loan proceeds on the wrong things. Remember, plan strategically before you commit to a loan obligation.
You also need to consider that the scale of your passion project depends on your resources. For now, you probably only spend a small chunk of your salary on it. But if you decide to take out a loan, you’re more likely to spend more money on it to pursue it on a bigger scale.
For example, if you like baking and want to bake more and better pastries, you’ll get a bigger and better oven. And if you want to take it a step further and open a bakery, you’ll have to get an industrial one. This means you are growing, and growth is a good thing.
Are You Willing to Work Beyond 9 to 5?
People often think that once they will have absolute freedom to approach a passion project. That, however, is not the case if it’s a business. Yes, you have the freedom to decide when to work, you can’t work fewer hours than your usual 9-to-5 if you want your business to succeed.
Aside from the hours you need to work, you also have to consider your customers’ preferences. For example, if you plan to grow plants and sell them for a profit, you might have to grow and sell plants that are popular but not to your taste.
How Do You Plan to Repay the Loan?
Taking out a loan should mean you are fully aware that you are adding another obligation to your long list of existing to-dos. Can you comply with the regular payments? Do you have a steady source of income to do so? On the other hand, if your passion project is a business, you can make it work to pay for the loan. However, it could mean less or even no profit in the first few years of your business.
Whatever your situation, outline a repayment plan that can work for you. Consider emergencies and unforeseen circumstances. You should have an emergency fund aside from your savings to effectively manage business risks. That way, you can repay the loan no matter what happens.
Conclusion
Whether we like it or not, money is a factor in passion projects. The lack of it is a hindrance while having the right amount can make it a reality. Thankfully, those who pursue it can take out a loan for it, which is not a problem, as long as they’re fulfilling their financial obligations. So if you’re thinking about borrowing money for something you’ve always wanted to do and have the means and the willingness to pay it back, go right ahead.
