In this episode, I talk about my recent experience of lending money out. If you've got spare cash on the sidelines, I cover how to lend safely and reduce your risk as far as possible. On the other side, if you want to raise private finance, it will give you an insight into how to structure the arrangement and allow the lender to be confident that their interest is protected.
Listen to this week’s show and learn:
- What kind of returns you can make by lending money out
- The circumstances in which this might be a useful thing to do
- The circumstances in which you can't make a loan, unless you're regulated
- Why (in my view) lending should only ever be on a secured basis – and what that means
- Seven different methods you can employ to reduce your risk when lending – or reassurances you can offer when you're borrowing
- Extra considerations when lending to friends and family (and why you should be very careful if asked for money by a “guru”!)
- Where to place private lending in the overall spectrum of risk and reward
Note: This discussion is limited purely to loans where a fixed percentage return is offered, irrespective of how well the project goes. “Joint venture” agreements (where, for example, profits are split) are entirely different and require an understanding of PS13/3.