Reply to: Micro-loans as biz investment?

[LisaContractorUmbrella]

Thanks, you may have prevented me from doing something stupid...

Now, how do I let him down gently?

Just explain that his friendship is too important to you to risk damaging it over something like money - if he's a mate he should understand

[frontenddeveloper]

Thanks, you may have prevented me from doing something stupid...

Now, how do I let him down gently?

[eek]

Apart from the fact he *may* default is that the only reason I shouldn't do it?

• No but a fool and his money is easily parted.

• Keep money and friendships separate.

[LisaContractorUmbrella]

Apart from the fact he *may* default is that the only reason I shouldn't do it?

£30,000 is a pretty big reason but no. I assume you have some sort of relationship with this chap - if you do and he defaults it will be ruined. Even if he doesn't pay on time and you have to chase him it will be ruined. If you don't have a relationship with him then I would question why you'd think it would be a good idea to loan the money. IMHO without a guarantor you are taking on a big risk

[frontenddeveloper]

Yep don't do it.

Apart from the fact he *may* default is that the only reason I shouldn't do it?

[LisaContractorUmbrella]

Hi,

Apologies for bringing up an old thread.

Does anyone have any experience of business-to-business type lending?

Someone I know has a business and he wants to expand and is need of a loan.

Can my business lend him some money (+small profit) without jumping through too many hoops (accounting/legal)?

So, for example he wants a £30,000 loan + £5,000 my profit over 24 months

Is this thing quite common? are there any template contracts around?

Personally, the chances of him defaulting are medium-high, is there a way to protect myself?

Look forward to your replies

Thanks

Yep don't do it.

[frontenddeveloper]

Hi,

Apologies for bringing up an old thread.

Does anyone have any experience of business-to-business type lending?

Someone I know has a business and he wants to expand and is need of a loan.

Can my business lend him some money (+small profit) without jumping through too many hoops (accounting/legal)?

So, for example he wants a £30,000 loan + £5,000 my profit over 24 months

Is this thing quite common? are there any template contracts around?

Personally, the chances of him defaulting are medium-high, is there a way to protect myself?

Look forward to your replies

Thanks

[TestMangler]

Now, the Wonga model i like. If memory serves right you were a loan shark at one time?

Haven't had time to look at their site in detail but was Reading about it last week. Fast, short term tie over loans which gave breathtaking APR. A legal loan shark business.

We need to understand the legalties / licensing of such a site first and then cost from there.

Wasn't a loan shark (as such). When I had my computer shop, early this century, I was getting a Consumer Credit Licence to resell finance from consumer finance companies. Ended up working out that I could do it myself instead. Worked out pretty well to be honest. No lost debts and very little chasing time involved.

Black Hole Finance Ltd has a kinda ring to it, doesn't it ?

[MarillionFan]

Right MF, you're a dude with an entrepreneurial outlook.

What about getting a few contractors together, getting a consumer credit licence (easy, or at least it used to be) and setting up your/our own micro loans company. At rates of roughly £25 per £100 per 30 days you wouldn't need to be dealing in massive amounts of cash to start turning and building a profit. This site has code monkeys, people with money, people with ideas and ability to get things done. Start small, work up. You in ?

Now, the Wonga model i like. If memory serves right you were a loan shark at one time?

Haven't had time to look at their site in detail but was Reading about it last week. Fast, short term tie over loans which gave breathtaking APR. A legal loan shark business.

We need to understand the legalties / licensing of such a site first and then cost from there.

[TestMangler]

I did Zopa and Ratesetter recently. Zopa seems to be coming in around 6/6.5% but I've not done it for long. Dimprawn also does it, but you can take his 8.9% after defaults with a pinch of salt.

There's been a whole list of peer to peer sites recently.

Peer to peer lending sites reviewed - Peer to peer lending websites - Credit cards & loans - Which? Money

Peer to business lending sites - Peer to peer lending websites - Credit cards & loans - Which? Money

I've been toying with the idea of pumping some Ltd cash in, but as with all of these schemes there not FSA covered, the rates advertised are not what you might get back, it's a long term investment and frankly I reckon some will spring up where they will walk away with your cash. If a company is saying it's leant out £5M of peoples money for say a 1% fee, then it doesnt take a genius to work out that it probably doesn't pay for it;s scheme.

Right MF, you're a dude with an entrepreneurial outlook.

What about getting a few contractors together, getting a consumer credit licence (easy, or at least it used to be) and setting up your/our own micro loans company. At rates of roughly £25 per £100 per 30 days you wouldn't need to be dealing in massive amounts of cash to start turning and building a profit. This site has code monkeys, people with money, people with ideas and ability to get things done. Start small, work up. You in ?

[MarillionFan]

I'm sure someone on here mentioned putting some cash into one of these things fairly recently.

Might have been MF.

I did Zopa and Ratesetter recently. Zopa seems to be coming in around 6/6.5% but I've not done it for long. Dimprawn also does it, but you can take his 8.9% after defaults with a pinch of salt.

There's been a whole list of peer to peer sites recently.

Peer to peer lending sites reviewed - Peer to peer lending websites - Credit cards & loans - Which? Money

Peer to business lending sites - Peer to peer lending websites - Credit cards & loans - Which? Money

I've been toying with the idea of pumping some Ltd cash in, but as with all of these schemes there not FSA covered, the rates advertised are not what you might get back, it's a long term investment and frankly I reckon some will spring up where they will walk away with your cash. If a company is saying it's leant out £5M of peoples money for say a 1% fee, then it doesnt take a genius to work out that it probably doesn't pay for it;s scheme.

[TestMangler]

I'm sure someone on here mentioned putting some cash into one of these things fairly recently.

Might have been MF.

[eek]

Well the people on here don't usually need loans.

I'm sure someone on here is getting a decent return on their Zopa loans but you will need to do and search and find them.

NLUK I think you've got the wrong end of the market here. Zopa is peer to peer lending run by the people who created egg, its not like those 44000% short term loan schemes that wonga and others offer.

[northernladuk]

Do you know how the micro loans business works?

They don't bank on you paying it back, they are a small front for a back office of lawyers who legally rape you the second you don't pay. The loans part is but a small part of it. Lending money to people below the poverty line? I don't think so.

Leave it well alone IMO.

[richy]

.. Just a quick msg to see if anyone have any thoughts on this.