Lending 50k to a BIL and friend for business

[tescorank]

So I’ve been approached by Brother in Law for £50k loan for 3 months and 10% interest payable as he says “monies coming down the pipeline”

They both own property and are in 60’s so how do I protect myself ?

Loan agreement-off the shelf ?
Joint and Several liability ?
Witnessed by Solicitor?

Any tips please

[Jamescrs]

Just say no is the best tip I can give.

Even if you manage to.draw up a legally binding agreement the family issues enforcing it would cause would probably be irreparable.

[paddy1970]

Don't do it. Do a search on this forum and you will see that it is the perfect recipe for loosing £50k and starting a family feud.

[Djtemeka]

Loan money if you can afford to lose it. If the banks said no then that’s a red card

[bigandclever]

And the bank won’t give him a loan because ..?

[Andeh1]

Such a risky area with family and money, receipe for disaster!

[CrgT16]

Don’t lend… give the money. If you are happy with that concept than do it.

Like others said, why haven’t the banks lent him the money, it’s not a vast sum £50k…

[67Dino]

Tricky one, as agree with what others have said that this is a highly risky move since if (even through no fault of his own) he can’t pay it back, you have a family dispute on your hands.

Think some kind of contract is a good idea to ensure all are agreed up front what is expected. eg if he can’t pay it all off in 3 months what happens? Pay it off over 5 years? Starting when? With interest? Legally, only helps of course if you would actually take him to court if he fails to pay.

One further thought: there are “guarantor loan” companies out there like Amigo Loans. If even some of it were don’t through that route then at least some of your lending would have a firmer basis.

[N111BJG]

I’m a Mediator & once dealt with a situation like this where the money could not be paid back for reasons that could not have been foreseen. The impact on what had previously been a harmonious family was devastating.
I’d say that you have to be able to financially & emotionally consider the money a gift & never expect it to be paid back.

[dundarach]

We have big bank with all the checks and insurances and risk experts and alike.

I'm certain they're better placed to handle such transactions?

As others have said, just say 'No'.

If you've come on here (You will never find a more wretched hive of scum and villainy.) then I suspect you already know the answer!

[tight fart]

Do you think the business is good, what’s it worth?
Would you be better off buying a share in the business?
Otherwise as others have said think of it as a gift.

[DanL]

As has been covered, if he really believed he could pay you back (and at 10% interest!) then he’d be better off borrowing from a bank. That he can’t or won’t do that should be enough of a reason for you to decline his kind offer.

[ozzuk]

Is 50k a lot of money to you I.e. can you afford to write it off (along with the relationship)? How close are you? If family needed money I'd lend, and certainly not at 10%. But it depends on you relationship, background (are they chancers for example).

[The Goat]

Never lend money to friends or family.........

[Muzzer79]

tescorank said:

So I’ve been approached by Brother in Law for £50k loan for 3 months and 10% interest payable as he says “monies coming down the pipeline”

They both own property and are in 60’s so how do I protect myself ?

Loan agreement-off the shelf ?
Joint and Several liability ?
Witnessed by Solicitor?

Any tips please

The truth is that you can't protect yourself.

Any security you get for the loan is worthless if you can't actually enforce it. He's your Brother in Law, if he puts his house up as collateral and then can't pay, are you really going to evict him and seize his home?

Either tell him you won't do it or tell him you don't have the money available.

As others have said, what is wrong with going to the bank?

[22]

A charge on the property. But, really, just don't do it.

[SDarks]

Hi OP,

Despite what others have said these sort of things can and do work out and it sounds like a good deal if all goes well.

I would want full visibility of the 'pipeline', where the money is being spent and who the customer that will be paying the money back is. If you are satisfied after this research rather than just giving over the money I would offer a drawdown facility so you pay the supplier/service provider direct at the time payment is needed. This avoids any situations where the money can go astray on other expenses.

In terms of security do they own any liquid assets? Cars, expensive watches, shares etc at equal or more value that you could take ownership of while the money is away? If they own property outright you could also set up a charge over the property but would you really force your BIL out of his home to recover the money?

[deckster]

What do they need the money for? Propping up a business? Day-to-day living expenses? Why is he going to be able to pay out a lump sum of £55k in six months time? Why doesn't he have the money now? Why can't he raise it from other sources?

Personally I'd not loan the money. If you have a good relationship, you don't need the money, and they need it to get out of a hole, then give it to them with no expectation of repayment. If he's on the level, then he'll give it back anyway. If he doesn't, or can't - well, you know what you're dealing with then.

If it's for a business, offer to invest for a %age of the business.

Otherwise, a polite "no" will cause a lot less family angst in the long run.

[Baldchap]

If you're happy not getting it back, do it. You might get it back, but assume you won't and life will be easier for all concerned.

[Om]

Don't do it.

We did do it. (they will never renege, their family!).

We regret doing it. (they reneged).

We have a charge in place on their property but we know we are not likely to see the money again/for a long time. (we are estranged).

Don't do it.