
Ask HN: Has anyone heard of taking out a loan to maximize ESPP contributions? - matmann2001
Was thinking about this the other day.  If your typical Employee Stock Purchase Program (ESPP) nets you a 15% minimum essentially-guaranteed return but you can&#x27;t afford to max out your paycheck contributions, why not find a loan for 10% or less to subsidize your paycheck so that you CAN max out contributions?  From the bank&#x27;s perspective, the only risk to mitigate would be the employee getting fired or the company going under.  Seems like a win-win, but has anyone heard of such a practice?
======
mankash666
What % of employees eligible for ESPP even need the few hundred $ extra per
paycheck that they won't max out ESPP?

They probably fall into these categories: 1> Unplanned financial crisis 2> New
hires, typically from college with loans

I'd guess the market isn't big enough

~~~
matmann2001
I'm thinking there might be more than you think, though you are probably right
that the distribution would skew towards younger employees. Even 10% of a
paycheck is decent sized chunk to have tied up in ESPP. Especially if you are
doing other %-based contributions like 401K/IRA. Especially in areas where
housing can cost 25% or more of your monthly earnings.

~~~
mankash666
@matmann2001 - you'll need to get more numbers to assess the total assessable
market (TAM).

ESPP eligibility might be a low% of the workforce given that SMBs employ much
more than public companies. even among public companies, ESSP is only offered
by a double digit % at best. Despite this, if the TAM is convincing, let's
chat

~~~
matmann2001
CNBC article from last year: [https://www.cnbc.com/2016/12/14/employee-stock-
purchase-plan...](https://www.cnbc.com/2016/12/14/employee-stock-purchase-
plans-are-underutilized.html)

Notably, Fidelity alone administers ESPP for 678,000 employees. Fidelity found
that only 1/3 of employees with access to ESPP actually use it.

