"With fewer companies getting funded these days, many startups are opting to borrow money instead. "
Leaves some serious financial issues.
Generally speaking - if you could raise debt, you wouldn't ever want to raise equity.
The whole point of raising equity surrounds the fact that there's too much risk for debt.
If you can get good terms on a deal, and are not too leveraged, then every VC should be wanting the company to have debt in lieu of equity. Why would anyone want to dilute if they don't have to?
What on earth are these startups using as collateral? Equipment? Receivables?
And given the likelihood of a startup going bust, why are banks even offering debt, at any price?
I can definitely understand a 'bridge loan' for some financial operation - or even holding off for better valuations ... or again, some kind of low-leverage on solid receivables for an SaaS or something ...
If someone has some experience with this, maybe they can chime in?