Interest on small loan - Posted by Bert G

Posted by Sean on February 03, 2000 at 18:52:07:

…ten percent doesn’t sound that bad. Let’s say you agree to loan her $6,000 at 10% on a 24 month amortization that’s payments of $276.87 a month.

But considering you’re getting $600 worth of services it may be more accurate to consider that you’re loaning her only $5,400 in which case your yield goes to 20.77

Interest on small loan - Posted by Bert G

Posted by Bert G on February 03, 2000 at 18:11:16:

I’ve just been approached by a good friend who just became a CPA and needs a little seed money to get her business started. Figures she needs about $6,000, mostly for software. Already has clients & office space lined up. (Its a good risk. Besides the CPA, she has a law degree so she knows what she’s getting into)

I’m just wondering what would be a fair amount of interest to ask. It would be only for 12 months, with one balloon payment at the end. She mentioned 10%, but that seems awufully low to me, especially since the shares I’d be selling to loan the money are earning me 19 - 25%.
Oh, and besides the interest I’d get 2 years free tax service. Thats worth at least $600 right there.

Comments appreciated. thanx
bert g

Re: Interest on small loan - Posted by John Behle

Posted by John Behle on February 04, 2000 at 20:12:29:

Ten percent on unsecured funds is an extremely low rate. I wouldn’t consider it for less than what you are getting. If your money is getting you as high as 25%, then I would do it at that rate - with the tax service as a kicker.

Or, if she is reluctant at that rate, then have her pay half the interest or anything over 10% in trade of services at a later time. That is something you could even sell or trade if you didn’t have a need right now. “Accounting script”.

Re: Interest on small loan - Posted by David Alexander

Posted by David Alexander on February 03, 2000 at 21:23:38:

I’d have her incorporate the business and make you a shareholder. You could set up the shares where maybe they are worth $1.00 each and you own 12,000 or so for your 6k. Maybe you could even structure it where their are monthly dividends payed until she buys the stock back at face value.

Does she hve any assets in the business to secure the money?

By the way if you have sums you are looking to place you just give ole Dave email, lol. I’m sure I can arrange better than 10% and secured at that.


David Alexander