Comment by BrandonM | Hacker News Reader

Comment by BrandonM | Hacker News Reader

I'm certainly no expert, but if you have (almost) guaranteed cash flow within some window that will make paying off the debt not a problem at all, I see no problem with taking on some temporary debt. Obviously, you are heavily investing your own funds at the moment, anyways, so what difference does it make if you put up some personal assets?

I can see a real benefit to using a loan in this situation, actually. It should be easy to close a reasonably small loan quickly, you don't have to give up any equity or worry about people trying to control what you do, and if you are in the position where you feel like a short-term loan is enough to get you over the hump to revenue, then you are probably on the path to success.

I do have two suggestions, however:

1. Get your partner in on the loan somehow, too. No matter how much you trust him/her, it's not really fair to you to expect you to take all that risk while your partner takes on none.

2. Reassess your situation and set reasonable expectations. How long will a loan last for? Is that long enough to finish the brunt of the work? How long until you start getting positive revenue (are you sure about your prospective customers)? With all those factors in mind, is the loan a smart way to proceed (i.e. an 80% chance that nothing will go wrong)?

Very good point on getting the partner involved in the loan- I'd like to do this, but I'm not sure how to. We have a Delaware corp set up, but since the company doesn't have any credit, I don't know how it could take out the loan.

Perhaps the company could take out the loan, and we could both co-sign?

We're probably about 3 months from being at a point I'd feel comfortable charging- If we got a 10K loan, we could probably cover this easy.

The problem comes in that if our estimates are off, we've made the world a lot more painful for ourselves. We've had quite a few customers asking to pre-register, but I don't like the quality of experience that would give.

I appreciate the advice, thanks.

I mostly was referring to having your partner cosign or put up some assets himself, instead of you taking it all on yourself. Honestly, though, a lot can happen in 3 months. Be careful not to get in over your head and get yourself in a position where you're subject to financial hardship if something goes wrong. Of course, a 10K loan isn't really that much, and split two ways, it could be paid off inside of a year without too much trouble, so it doesn't seem to me like your risk is too high.

That said, you might want to take a little bit more just to give yourselves some leeway. That would allow you to use a portion of the loan to make the initial few (6 or so?) payments. If you think you're going to need to support your partner for 3 months full-time, I'd shoot more for 4, and allowing yourself a full-time month (in case it becomes necessary) might not be bad, either. Finally, I'd suggest using some of it for the operating costs you mentioned, so that you can work your other job a little less and spend more time on the startup.

One last suggestion: sit down for some time with your partner and discuss what the loan will need to pay for, how much is needed, and how it is going to be allocated. Leave part of it unallocated as a contingency fund. Discuss how to split the responsibility for the debt in the event of a failure. In other words, get everything on the table now so that there are no surprises down the line.

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