[admoin]

Maybe I read this too quickly, but the vast majority of people you'd want to lend this kind of money to are either (a) not going to want to borrow money at 20% interest, or (b) have access to far lower interest sources of funding, even in the unsecured context. This idea doesn't make much sense to me.

[cool-RR]

As for (a): 20% is considered a huge interest by most people. But that's because most people are not entrepreneurs. A good entrepreneur is a poor college kid at age 20 and a multi-millionaire at 27. That's a growth rate that far exceeds 20%.

I would personally take that loan at 30%, and even more.

For (b): I don't have access to such a thing. I found that without a job I couldn't get a loan bigger than $10,000. I would be very happy if you showed me a program which would give me a big loan, at any interest rate which is below 40%.

[nostrademons]

A good entrepreneur can also get equity financing on reasonable terms, usually.

[cool-RR]

For a start-up proper, yes. But most of my projects are not really start-ups which I can sell equity from.

Imagine you decide to study some cool new technology. You are making a bet: Learning this technology now might get you a great reward in the future, but you can possibly just be wasting your valuable time. So it's a sort of mini-startup, your study of this technology. But you can't sell equity out of that thing.

[nostrademons]

How do you expect to pay back debt then?

If you're looking for ways to support talented people with pie-in-the-sky ideas, that's what the Macarthur Fellowships are for. Those are outright grants, so the people in question can concentrate on what they love and not have to worry about paying back a high-interest loan.

[alain94040]

Maybe 1% of startups get VC or angel funding. Do you really believe that getting funding is easy? Especially in this climate, investors wouldn't put money in Bill Gates today if he begged.

[nostrademons]

No. I believe that good entrepreneurs are that rare.