How Equity-Backed Loans for Founders Actually Work
Equity-backed loans allow founders to borrow against their private company stock without selling it, providing a way to access cash without immediate tax implications or diluting ownership. However, these loans come with high interest rates, fees, and low loan-to-value ratios, meaning founders only receive a fraction of their equity's worth. While they solve short-term liquidity issues, they do not address the underlying risk of concentrated wealth in a single, illiquid asset.
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