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Would you lend your best friend a significant amount of money?

  • Thread starter Thread starter FP
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FP

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My brother's best friend (they are both 34) wants to borrow about 50% of his liquid net worth. His friend will be paying him prime+2 over a period of 2-3 years and all of this will be under contract.

The money is for a business startup and if it succeeds (ie makes money) my brother will get a % of the profits on top of the monthly payments as a "bonus." The bonuses will last until the loan is paid off in full.

Obviously starting your own business is risky but on paper it does seem like it will succeed.

They have known each other since grade school and his friend has always been responsible with his money. His friend was just going to get a bank loan for the money but my brother wanted to "get in" on the action without taking on work. He is looking at it like a fairly short term investment.

So my question to you ATOT, if your best friend wanted to borrow a significant amount of your liquid net worth would you lend it to him/her? If so, how much would you be willing to lend?
 
Not unless I didn't care whether it was paid back or not (general rule for lending money).
 
If they are a friend, they shouldn't be asking for money. If the friend needs money, he could probably get help from the fed. government with small business grants and loans.
 
Originally posted by: wfbberzerker
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

exactly.
Click to expand...

Sadly I agree with this. Depends on the friend though. But for the most part it would depend highly on the situation
 
Business and friends don't mix.
However I have no problem lending my best friend money. He has a job and he would pay me back. I wouldn't lend it for a business venture though.
 
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

Answer: Don't make friends with deadbeats.

I've lent and borrowed money from friends, and it's never been a problem. Yes, even significant amounts.
 
Originally posted by: yobarman
Originally posted by: wfbberzerker
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

exactly.
Click to expand...

Sadly I agree with this. Depends on the friend though. But for the most part it would depend highly on the situation
Click to expand...

I say this not because I don't trust all of my friends. I say this because of the numerous unforseen circumstances that may arise, and as a result I'd be out whatever money I loaned them. I would probably lose a friendship if I pushed and tried to collect my money.

If it's say $20, $50, or even $100 for one or two of my close friends, I don't mind spotting them. If I get it back, great. If I dont? I'll bust his balls and he'll pick up my bar tab one night.

But tens of thousands of dollars? Not happening.
 
Past experiences with <$10

NO. They put you in the position of an asshole when they can't pay up(or don't) cause your a friend
 
Originally posted by: jagec
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

Answer: Don't make friends with deadbeats.

I've lent and borrowed money from friends, and it's never been a problem. Yes, even significant amounts.
Click to expand...

Read ^^

So you're telling me you'd loan a close friend tens of thousands of dollars on a risky business venture?
 
I would have to agree with OP. You should only lend money if you don't expect to get it back. What legal actions would your brother take if the friend defaulted on the loan?
 
I would help a friend out if he needed it desperately I think, but never if he/she was looking to blow someone else's cash on something that may or may not work out.
 
A couple of things...

1. His friend didn't approach my brother for money. My brother has a ton of money sitting in a low interest savings account and approached his friend asking about the business idea. His friend offered a working part in the venture but my brother already has a 10+ hour a day job. They then came up with the loan idea together. Both of them will be keeping their day jobs.

2. His friend can easily afford the monthly payments on the loan with his current day job.

I personally don't think it is a good idea but I don't have any best friends who are financially responsible. I would rather take the money out of savings and invest it in some index funds but to each their own.
 
Probably not but it depends on the circumstances.

What is the money for, their ability to repay, are they trustworthy, how close of a friend, etc.
 
Originally posted by: binister
A couple of things...

1. His friend didn't approach my brother for money. My brother has a ton of money sitting in a low interest savings account and approached his friend asking about the business idea. His friend offered a working part in the venture but my brother already has a 10+ hour a day job. They then came up with the loan idea together. Both of them will be keeping their day jobs.

2. His friend can easily afford the monthly payments on the loan with his current day job.

I personally don't think it is a good idea but I don't have any best friends who are financially responsible. I would rather take the money out of savings and invest it in some index funds but to each their own.
Click to expand...

What you describe really isn't the same as what many would consider to be a straight-up loan to a friend (at least, not the normal circumstances that usually apply).

Technically, it is a loan. But I feel it's more of an investment than a "loan" in this case.

The problem with #2 is that what happens if there are lawsuits, bankruptcy issues, all sorts of stuff like that. Then your brother's friend isn't going to have jack squat.
 
Originally posted by: BigJ
Originally posted by: jagec
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

Answer: Don't make friends with deadbeats.

I've lent and borrowed money from friends, and it's never been a problem. Yes, even significant amounts.
Click to expand...

Read ^^

So you're telling me you'd loan a close friend tens of thousands of dollars on a risky business venture?
Click to expand...

My friends wouldn't borrow money from me if they couldn't pay it back eventually, and vice versa. Risky business ventures aren't the same thing as any old loan.

The OP just asked if you'd lend your best friend a large amount of money...he never said it was for the sort of risky scenario his brother is in.
 
Originally posted by: jagec
Originally posted by: BigJ
Originally posted by: jagec
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

Answer: Don't make friends with deadbeats.

I've lent and borrowed money from friends, and it's never been a problem. Yes, even significant amounts.
Click to expand...

Read ^^

So you're telling me you'd loan a close friend tens of thousands of dollars on a risky business venture?
Click to expand...

My friends wouldn't borrow money from me if they couldn't pay it back eventually, and vice versa. Risky business ventures aren't the same thing as any old loan.

The OP just asked if you'd lend your best friend a large amount of money...he never said it was for the sort of risky scenario his brother is in.
Click to expand...

You are correct. I was just wondering about lending in general.

My brothers situation got me thinking about my best friend and how the money would be spent on strippers/booze and a new car (which would be filled with strippers/booze and wrapped around a tree in a week). Now, lending him my house to hide in from the cops? Absolutely... 😉
 
If he can draw up a proper formal agreement, and if he is lending the friend money anyways, he might as well get in on the deal on the long term, not just until it's payed off.

I'm only saying this because there seems to be some kind of written agreement. Otherwise, I don't know if I would do it myself.
 
Originally posted by: jagec
Originally posted by: BigJ
Not a fvcking chance.

Friends and money are like oil and water:

They don't mix.
Click to expand...

Answer: Don't make friends with deadbeats.

I've lent and borrowed money from friends, and it's never been a problem. Yes, even significant amounts.
Click to expand...


Agreed.

I might be friends with a person that I can't trust with money, but no one would ever make it to my 'best' friend if he/she was untrustworthy.
 
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