Have / Would you borrow or lend money to/from a friend for a business?

[geepy]

Been there, done that. (no T-shirt)

 

[elizabethbinary]

You should remind her there are much more excellent ways to invest $30,000 and get more than an 8% return. With that dough you should be getting at least 12 if you can find the right venues. Or have fun on the stock market at least.

Considering inflation is around 6%... minus fees and taxes... yeah not so good.

 

[debilorrah]

Well, Nifty I think the consensus is overwhelming - NO.

 

[bargain]

Well I would say it's a bad idea for that chunk of change! I would want a business plan, etc. for anything of substance in the way of a loan? If the prospective lender is so wealthy as to never miss the money, never regret it, then that's one thing, but if s/he would ever need it, it's a different matter.

I once lent money for a similar reason, many long years ago and never saw a time of it later. With minimal interest, it would would have paid for feed for quite a long time ....ah well....lesson learned and I didn't get the bumper sticker or the t shirt!

 

[ivan3]

I've invested/donated time and labor in a few ventures that worked out well, and one that had lost its wings before it left the ground. Whenever I see these folks, as we go about our appointed rounds, we always wave and smile. Better the good will and favors, imho.

 

[deerman]

easiest way to end a friendship.........loan them money. I wound rather give a friend money than loan them money.

30,000 times no

 

[Mahonri]

NO!
&
NO!

Find a bank.... and good luck with that.

 

[Kansaseq]

No

 

[Organics North]

My gut is saying no, because the person is asking or willing to accept money from a friend. Many times I have had friends or relatives say they want to invest in things I have done... Nope, will not take money from friends or family IF I could not just as easily go to a bank or venture capitalist group and get the money.

With that said, I am not apposed to family business transactions at all, of course with the paperwork and documents to support it. I have borrowed from family for home loans when getting started, we have also conducted other transactions within the family. I strongly believe working as team gets the whole family ahead financially in the long run..

IMO we (BYC readers) do not have enough info to go on here... What is her credit rating? The business plan? Why can she not start small? Leverage her home, sell her car, sell stocks or investments, cash in a 401K?.. If she has exhausted these things or does not have them, it may not be the best idea to risk 30K on a business venture, and poor judgement to ask a friend to borrow it.

"Good ideas" are a dime a dozen... Anyone self employed knows it is all in the implementation/Realization of those ideas..

ON

 

[booker81]

My mom put up $500,000 in collateral property to secure a loan for a guy that worked for her. He wanted to buy an old non-functioning granary to turn around and start a business. The terms of his payments were to pay back over 5 years. The loan and whatnot was set up with a lawyer, and my mom was to be advised of all his spending decisions for the granary.

He paid her back in one year, and has been extremely successful since. The granary is still running, and is now also a complete pet and animal supply store, along with a specialty mix store for feed.

My dad put up $250,000 for a local guy to clean up the soil and tanks and replace the pumps for his gas station. No lawyer was involved. This was 10 years ago. He's still trying to pay back because he got the pumps in and then decided with fluxing gas prices that he didn't want to sell gas. My dad has to drive out and bother him a couple times a month to make sure he gets paid, and who knows when he will finally pay the loan back. My parents now could really use the money, but the guy just doesn't get around to paying them, and doesn't really make enough now TO pay them.

Even if they are bestest friends, get a lawyer involved. The guy my mom loaned to was her "almost" son, and was like a brother to me. He spent more time with my family than he did his. Still, they did it right, with a lawyer, and it turned out well.