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Comment by mhd | Hacker News Reader

This sounds a bit suspicious to me, i.e. I couldn't help but reading this in a fake Brooklyn/Jersey accent wise guy accent.

How are such loans handled in the UK regarding liability? I mean, if you have a limited company, does one of the founders have to vouch for it with his personal possessions (as it's often handled here in Germany, for obvious reasons)?

Yes, if you're doing good, they won't be hasty in getting the money back, but they just might kick you on your way down, possibly thus ruining your last shot of getting back up again.

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Reason number seven million we are not registered in Germany.

Seriously, though, how difficult is it to get a limited liability going in Germany? Moving there next month.

Pretty easy nowadays. The traditional way is the GmbH, which required you to have a capital of 25k Euros. Now as we're in the EU, you could register your company everywhere and lots of countries provided you with easier access to limited liability. As an answer to this, there's a beginner's version, the "UG", where the lower limit of starting capital is 1 Euro and unless you have more than three founders, there are form letters that make the legalities very easy.

Good - sounds more competitive.

It cost us 100€ with min of 1€ capital in the Republic + 10€ legal swearing fee. I filled in the form myself.

In the UK the liability of directors is limited to the nominal value originally invested (usually £100).

Thus limited, this isn't that much different in Germany. I wasn't really asking about the legal ramifications, but how the banks treat it (and if this incubator does it differently).

Let's say a director of a limited company with a low capital (UK Ltd, German UG etc.) wants to take out a loan on the company. The default risk would be pretty high, and so it's standard practice that the loan contract includes and additional clause that the director is directly liable. Doesn't change the law itself, just an additional contractual obligation.

That's why I'm interested in how the UK banks (and/or this incubator) would treat this. Either they do it the same way, the state takes care of such losses or they're much more eager to accept risks than banks here (which, given recent history, wouldn't surprise me either).

20k GPB for 6% strikes me as rather high, as -- never mind all the aforementioned scrutiny -- getting a loan that high isn't really that much of a deal.

I know nothing of this incubator, but I've heard that banks often ask for personal guarantees. There are various cases I've heard of where the business has failed and people have lost their homes, which were used as guarantee.

It probably comes down to what can be negotiated and I think it's mostly the same as you describe in Germany: Liability is limited unless you agree that it is not.

As a side note, I've had personal experience of one fund which hoped to get back the money given regardless of success or failure. I declined to get involved with them.

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