My co-founders and I went
to the bank to get a loan. They wanted our accounts, which were not in great
shape. We cleaned up the books and went back. The bank said they would loan us $12K, but they wanted personal
guarantees. I didn’t know what that meant.
They wanted us to pledge
our personal assets (cars, houses, etc) as collateral to cover the loan. One of
the other founders did not have any assets the bank would accept, so they want
his family to guarantee the loan. They
also wanted to charge us 3% over the existing bank rate on a variable basis.
Our accountant told us this was insane and
expensive, but we’re running out of cash and aren’t sure where else to get the
money. I wonder if we'd be having the same difficulty if our accounts were in order when we first went in.