Conflicted on Entrepreneurship Loan Opportunity

[Bankerdiet]

I have an opportunity I am conflicted on, and would like to know people's thoughts. The offer is essentially a loan paid out to me over two years in monthly increments. The amount is roughly 70% of my current pre-tax salary. The purpose is to provide a "monthly income" while I work on building a company. I just completed my second year of investment banking, but have always had an entrepreneurial itch. This offer allows me to continue paying rent and feeding myself without having to worry too much about finances. The repayment mechanism is what makes this unique. Instead of fixed payments after two years, the repayment can come in two different forms. The first is a share of my future income, say 10% of my future income should I start earning a salary again (aka if my company fails). The other option is to convert the loan liability in to equity in my new company should it show signs fo success and the ability to raise a round of institutional capital. I am generally avoidant of debt, but this seems like a nuanced way to be able to start a company without sleeping on a friends couch and eating ramen noodles. I'd be interested in thoughts or concerns here as I think through my options.

 

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[Champion]

Have you taken a look at your chambers of commerce and what other government funding options are open to you?

In Germany we have possibility of applying for an entrepreneurial loan that pays 60% of our salary if we worked for over 1 year in a job (they will pay you this for 6 months).

Currently I have been working at my company for 9 months and I already told them im quitting in December (I will have 12 months then). Then, I will get 60% of my salary for another 6 months and use that money to live privately while hustling on the business.

Sometimes you would be surprised how much free help and support you have available to you out there!

Best
Champion

 

[WinYourself]

Never go into debt to finance lifestyle.
Keep your job, build an additional cash flow stream in your free and down time. (Consulting, e-commerce, affiliate marketing, freelancing....)
Quit your job once your additional cashflow stream can replace the income from your job, then focus on building something sustainable while continuing getting income from your side hustle.

 

[Bankerdiet]

Have you taken a look at your chambers of commerce and what other government funding options are open to you?

In Germany we have possibility of applying for an entrepreneurial loan that pays 60% of our salary if we worked for over 1 year in a job (they will pay you this for 6 months).

Currently I have been working at my company for 9 months and I already told them im quitting in December (I will have 12 months then). Then, I will get 60% of my salary for another 6 months and use that money to live privately while hustling on the business.

Sometimes you would be surprised how much free help and support you have available to you out there!

Best
Champion

Interesting. I hadn't thought of that option. I'll have to investigate further, although I haven't seen anything like that in the US.

 

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[Kak]

Put me down as someone that avoids debt unless it is for real estate, business equipment or a cashflow purpose.

A loan to pay bills... No, never.