Can an entrepreneur request that his salary be inclusive in a business loan?
Posted by admin on Nov 1, 2008 in Small Business |
hewgnew_342634 asked:
I am curious that some businesses kick off in a few short month and the entrepreneur managaing that business must have dedicated full time towards making it successful.
I am curious that some businesses kick off in a few short month and the entrepreneur managaing that business must have dedicated full time towards making it successful.
If they included a salary for the entrepreneur when applying for the loan, is there a cap?
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I think being a deserving entrepreneur is about taking on the risk. If you’re friends with the loaner, then yes you can but otherwise, professionally, I do not believe that is capable of being done. The loan is all encompassing, everything for the business, therefore the money you live on should be your own, the profits you get from the business is your salary.
I think you can request whatever you want and if you find a loan officer willing to do it then more power to you. However, the likelihood of finding a lender that is going to include your salary as part of the loan proceeds is slim. If you do, that loan officer will probably not be making loans for too long so you better get what you can to begin with. Your income should come from the business not a bank loan.
Unless you have a proven track record with other start-up businesses or an unusually favorable relationship with your lender this type of arrangement is not the norm.
However this is not to say that you couldn’t build some sort of salary draw into unspecified expenses but it would be difficult to have an appreciable salary to access for any length of time in this fashion.