My husband is trying to start a business that requires around $450K in funding. He hasn't been able to find investors. He wants to use all of our personal assets-- home equity, 401k, and cash-- as collateral to secure a bank loan. He has not done any saving with starting a business in mind, so all of the cash we'd be putting up as collateral is literally just our regular savings account. Our total assets do not add up to $450k.
I am uncomfortable with this. He says it is a risk that successful business owners take.
I am also uncomfortable because his plan, once securing financing, is to quit his job and draw a salary from the business loan as he runs the business.
I don't know anything about starting a business. Is all of this pretty much normal procedure? It sounds like a disaster in the making to me. I have tried to research it online but I just can't find enough detailed information.