3 ms·
Is the equity transferrable? Can it be "repossessed" by a bank if you default? The legal structure of the startup is important here and may be preventative.
by smt88 5y ago
Is the equity transferrable? Can it be "repossessed" by a bank if you default? The legal structure of the startup is important here and may be preventative.
- tluyben2 5y agoThis is really important; collateral means nothing if lender cannot act. I am not from the US but at least I had partners do this in the past a few times; the lender wanted 3x the amount in equity (shares can drop especially in startups), the equity had to be transferable and the guys had to personally sign and if married, their partners too (shares can become $0, especially in startups). The interest rate was quite good, but one of my friends is still paying it off over a decade later which got him into all kinds of issues with his relationship and family.