Billionaire Mark Cuban Says Only Morons Start Businesses with Loans

billionaire mark cuban

18 Jun Billionaire Mark Cuban Says Only Morons Start Businesses with Loans


Start businesses with loans not for mark cuban

Don’t Start Businesses with Loans

I think Mark Cuban must be a Financial Excellence fan. Say what you want about the outspoken owner of the Dallas Mavericks and self-made billionaire, but he brings up some excellent points in this interview. Especially his comment about being a moron if you start businesses with loans.

I often say if you want to be a millionaire, do what millionaires do. The same obviously holds true for billionaires. Here’s one with some great advice on starting businesses and the amount of work it takes to make a start-up business succeed.

I’ve said for years that loans are a bad idea for businesses. Every business plan template you can find online is designed to convince the bank to loan you money. The funny thing is, by loaning money you’re taking a shortcut in your business plan. If you put together a solid business plan that doesn’t rely on borrowed money to work, you’ve got a plan that’s much more likely to succeed.

That’s because it forces you to make sure your business plan is rock solid before just jumping into it. When you use someone else’s money, you’re much less likely to behave as if it’s your own money on the line. Is it tough to start a business without a loan? You bet it is. Can a business fail without a loan? Of course. Are there some cases where borrowing makes more sense? Sure, it’s more convenient and can help the business owner leverage their resources. A better route, though, might be to get some investors to help fund the business instead.

What do you think? Is it even possible to start a business without a loan in today’s environment? Or am I off my rocker?

8 Comments
  • krantcents
    Posted at 18:02h, 18 June

    My first business grew from an investment. My investment was a down payment for an apartment building. The rest was a mortgage. This is the typical way you you buy income property. Not all businesses can operate without loans.

    • Matt Wegner
      Posted at 04:46h, 19 June

      I’d agree it’s rare to buy investment properties without a loan. Still possible, but takes a lot longer time to build up the cash first. It can be done but it’s rarely done. I prefer a larger down payment to have more equity up front and minimize risk from market swings.

  • Trevor
    Posted at 10:16h, 21 June

    I completely agree that, if possible, never take out a loan for your business. Its easy to waste that money that you didn’t earn, and it doesn’t reflect a steady foundation for your business. But, ya know, it takes money to gain money, and sometimes risks are necessary; its all part of entrepreneurship. If you can’t get money to start your business any other way, what are you going to do?

    • Matt Wegner
      Posted at 11:27h, 21 June

      Agreed. I think the first step is to make the business plan without loans, then get investors, then use the loan as a last resort.

  • Kevin Watts @Graduating from Debt
    Posted at 12:41h, 14 July

    I agree that taking out a loan can be a shortcut to success. However there are some businesses where it makes a lot more sense to take out a loan.

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