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Comment by lsc | Hacker News Reader

>If you have a growing business making money it should be fairly straightforward to get a loan under your business name.

this is not my experience, not without a personal guarantee or collateral that holds it's value better than servers.

(Leasing servers was also an option that would have made sense then. Most of the leasing deals I was offered that didn't include personal guarantees were two year leases wherein I paid about as much as the servers would cost up front over two years. It would have made sense in that case, but it's super expensive compared to buying servers)

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This. Loans for small business require personal guarantees. If you are at a point that you need the capital that badly that you cant leverage it from existing cashflow, and VCs put you into their "maybe later" bucket (e.g. "no" for the rest of us), then requiring a personal guarantee is a signal for you. The signal means you should consider whether or not you should continue your endeavor, as the bank values your net worth and its leverage, far more than it values your business.

I've been down this road. I did not answer this question properly. Doesn't matter how much you believe in yourself, if the bank wants a personal guarantee, they dont really believe in your vision.

My best advice 3 year post blow up. It ain't worth it. Move on. You will save yourself pain.

>My best advice 3 year post blow up. It ain't worth it. Move on. You will save yourself pain.

My own personal view, if I could go back in time, would be to tell myself to go all in. I think it had a shot, and I needed to take that shot. I still think risking a bankruptcy to get a better chance at that would have been worth it.

I don't regret trying. I needed to try. And I think it was a near-run thing. I could have made it. I feel like there are several points here where if i zigged instead of zagging, I'd have done really well.

I just regret that I spent so long at it, without much success. A spectacular flameout involving business and personal bankruptcy after three or five years would have been far better for my long-term financial health than just slogging along at 1/4 wages for a decade.

I disagree depending on the circumstances.

If you are just trying to make ends meet, then yes, probably don’t go for it.

If you need access to working capital to hire more people, increase production, etc then it’s completely worth it.

For reference I founded a consulting company. We landed large projects. Had to pay employees to produce the deliverables, but did not get paid until later.

Basic math here is: Typically Net 30 terms. Usually have to pay a month or so worth of salary before hitting milestone to allow billing (then 30 more days to get paid). With $80k/mo in salaries we required working capital.

Even at the criminal levels that are charged for startup loans (plus personal guarantee) it is worth it when you are making 60%+ margins.

I have since paid down the loan and then sold the consulting side to focus on some products with a small in-house team. Funded for years at this point.

Local bank offered $250k on a 3.8% APR. SBA offered $110k on 8% APR. bank loans aren’t that bad in a low interest rate environment.. SBA has a much more flexible repayment plan tho

Plus once you’re in profit, your loan frees up capital for growth.

You can file bankruptcy on failed loans. 2-3 years out the game and then you jump right back in

Don’t act like bankruptcy is bad, it’s a valid pathway and you should by all means use it instead of sitting in a hole for 5 years or more. But learn from it, don’t be that person filing chapter 7s every 7 years

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