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You always have a _choice_. Your alternative is not to sign. Of course you want the benefits of the lease - your company needs space, or whatever. So your choi

You always have a _choice_. Your alternative is not to sign. Of course you want the benefits of the lease - your company needs space, or whatever. So your choice becomes "sign, or don't get the lease." Which brings us to risk. The landlord understands your business is in a risky phase. They can't control that, so they'd prefer that you, personally, since you have control, take that risk. There are two approaches you can take here - a) own nothing. If you own nothing then you can take on all the risk you like since debtors prison is no longer a thing. Of course then you need someone to own your assets, which leads to a different kind of risk. Or b) negotiate hard. 20 years ago we managed to get a lease without personal surety by paying a much larger deposit. We basically payed to move the risk back to the landlord. (it turned out well for him, we're still there, and we've been his best, and longest, tenent in the building.) C) walk away. Find another way to get what you need. Or D) agree to take on the risk personally. Bet all your worldly possessions - go all in. Not the approach I recommend, but seems like many folk are happy with this approach.

e1g 4y ago
Nobody here is betting all their worldly possessions. In my case, I run a profitable enterprise SaaS business with enough cash balance (from retained earnings) to pay the entire lease term upfront without a significant impact. I demonstrated this to every landlord, and none changed their requirements. The market norms are what they are. In the case of the article, the founder raised $100M, was on the cover of the Inc magazine, lives in a $3-4m house, and her husband sold another startup for $80M, etc. They hardly lose sleep over a $1.7M lawsuit in real estate. In NYC, that's just another minor claims dispute.
- bruce511 4y ago
  Fair enough, when I say "all your worldly possessions" I'm assuming you have less than the outstanding value of the lease (or loan, or whatever you are signing surety for.) I was speaking from the perspective of someone who considers $1.7m to be more than just pocket-change. >> In my case, I run a profitable enterprise SaaS business with enough cash balance (from retained earnings) to pay the entire lease term upfront without a significant impact. I demonstrated this to every landlord, and none changed their requirements. Then clearly one option you have is to pay the lease upfront, and presumably if you did that you don't need to sign a personal surety since then there's nothing to sign for. Of course the landlord doesn't really care what your cash status is _now_ - they care what your business cash status may be 4 years from now. The risk to them is not at the moment they take on the lease, it's in all the moments from now to the end of the lease. And risk can change dramatically over that period. If I was a landlord, and you came to me showing that you had the entire lease in cash lying around, and you didn't want to sign surety, then I'm sure we could do a deal for a single up-front payment - probably with very generous terms to you to allow for the future value of money.

e1g 4y ago

Nobody here is betting all their worldly possessions. In my case, I run a profitable enterprise SaaS business with enough cash balance (from retained earnings) to pay the entire lease term upfront without a significant impact. I demonstrated this to every landlord, and none changed their requirements. The market norms are what they are. In the case of the article, the founder raised $100M, was on the cover of the Inc magazine, lives in a $3-4m house, and her husband sold another startup for $80M, etc. They hardly lose sleep over a $1.7M lawsuit in real estate. In NYC, that's just another minor claims dispute.

bruce511 4y ago
Fair enough, when I say "all your worldly possessions" I'm assuming you have less than the outstanding value of the lease (or loan, or whatever you are signing surety for.) I was speaking from the perspective of someone who considers $1.7m to be more than just pocket-change. >> In my case, I run a profitable enterprise SaaS business with enough cash balance (from retained earnings) to pay the entire lease term upfront without a significant impact. I demonstrated this to every landlord, and none changed their requirements. Then clearly one option you have is to pay the lease upfront, and presumably if you did that you don't need to sign a personal surety since then there's nothing to sign for. Of course the landlord doesn't really care what your cash status is _now_ - they care what your business cash status may be 4 years from now. The risk to them is not at the moment they take on the lease, it's in all the moments from now to the end of the lease. And risk can change dramatically over that period. If I was a landlord, and you came to me showing that you had the entire lease in cash lying around, and you didn't want to sign surety, then I'm sure we could do a deal for a single up-front payment - probably with very generous terms to you to allow for the future value of money.