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Comment by arjie | Hacker News Reader

Huh, what you’re describing is what I assumed it was. I thought it was secured against the asset itself. I can see why they hesitate somewhat. In the US, this is usually a covert bailout for a vote bank. Grant loans for their machines and then the state takes possession and discharges the loan and you have a bailout in disguise.

But you’re right. Everything is in execution and for critical manufacturing it makes sense to pay the fraud price to boost it.

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You aren't wrong - the loan itself can be secured against machinery. But you will still be forced to sign unlimited personal liability for the loan itself unless the business is already well-established and profitable in which case they'll take it out of the business instead.

If the business fails the bank will pay someone to come take the machines away then dump it at the nearest auction. If something happens to the machine no one involved cares because you eat the liability (good luck proving otherwise when you're broke).

($LOAN_BALANCE - $AUCTION_PRICE) + $REPOSESSION_FEES + $AUCTION_FEES + $LOAN_DEFAULT_FEES = $YOUR_LIABILITY.

If you dig into the stats actual startups and small businesses mostly don't use any government small business programs. The few that do get used are most often gamed by much larger companies who "contract" with RandomJoe Inc who exists only to claim to be a small business.

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