The US government should issue low interest loans to startups just as they do for student loans. What better education could one ask for?
10 answers from the community
The potential for abuse in that scenario would be unfathomable. But it would also be really great for encouraging creativity, innovation, & entrepreneurship in the United States which is still one of the only categories that the US could still possibly be #1 in the world in. At least the US would have a lot of bad debt they could write off on their taxes :)
You shouldn't start a startup with a loan.
I agree. Startups are risky; most of them fail. So, why take out a loan when you know you're guaranteed to have to return it even if your startup fails. This is why the angel and VC community exists; to provide funding for these risky ventures in return for an ownership percentage.
You just regurgitated the classical argument that wealthy people put forth to politicians in order to justify a low capital gains tax. This argument is one of the main reasons that r > g.
There are millions of people with college degrees and no viable way to pay the loans that funded them. What is the difference as to whether the debt was acquired through school or through a risky startup venture? People who are DEEP in student loan debt realize they cannot escape this obligation. They must eventually pay it off. The same can be done with entrepreneurs. They may fail along the way, but eventually they will pay off that loan.
<p>Wtf do you mean eventually? If you take a govt loan and you fail you're doomed since the loan cannot be written off unlike a commercial loan. That means no more attempts since nobody would fund you knowing the govt may garnish their investment.</p>
THIS
Enough talking from the gut. Support your argument.
UK govt does this and a number of accelerators push this as a solution for early stage startup funding.
The loans have a three month time pressure -what startup has it's revenue streams sorted and delivering within three months of securing funding?
The attitude seems to be that a pot of money alone can jump start our startup dreams but I place a greater value on the expertise and network that comes with investors who have domain knowledge.
Putting myself in hock for a few months of runway and debt repayments for several years isn't progress it's a prison sentence.
I do support fixing the SBA's loan process. That's the vehicle you are asking about.
However, there are lots of ways to start a business and keep costs way down. We started ours with some savings, which is pretty traditional (and BTW we made a ton of mistakes around expenses in year 1).
Work from your home or rent space on the cheap, furniture from Craigslist, lease equipment (yes there are a few companies that will lease to startups including one here in Austin), don't plan to pay yourself right away, do some low-cost advertising experiments to determine a market, etc. Be scrappy.
Unless you're planning to build the next Tesla or Apple, expenses as an early-stage startup shouldn't be through the roof. No VC wants to see a company that's gone crazy on OpEx.
Suggestion for this site: As this is a community of entrepreneurs, vc's, etc. it would be awesome to have a forum here of 'public policy features' that the community could vote on - kind of like the uservoice feature feedback forums we see/use so often. Imagine being able to capture ideas like this, vote on them as a community and then provide that as an information source to policy makers.