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No, in this example the person sold equity in order to get the 500K. They can't use the equity as collateral for the loan because they dont own it anymore
by andrewmutz 2y ago
No, in this example the person sold equity in order to get the 500K. They can't use the equity as collateral for the loan because they dont own it anymore
- nine_k 2y agoYes. They should not have if they were to optimize taxes.
- tyre 2y agoBut then they’re paying interest and very few startups are going to have stock that a someone will lend against. I cannot imagine someone taking Series A stock as collateral for a loan.
- kelnos 2y agoI think it'd be pretty rare for a bank to accept equity in a series A startup as collateral for a loan.
- andrewmutz 2y agoAnd even if it did, it wouldn't really derisk much for the founder, which was the original purpose of taking money off the table.