Would you lend money to a casual friend?

[Muncher]

I have a friend who I see about 2-3 times a year for a chat, dinner and movie. We've known each other for about 10 years on a casual basis (that is, we don't actually know too many personal things about each other).

Would you lend this friend several thousands of dollars to start a new business? I've got some cash which is my emergency fund in these horrible economic times.

What would you say?

[df329]

nope stupid idea..

[angel_wing0]

not in a million years.

[questrader]

I have a friend who I see about 2-3 times a year for a chat, dinner and movie. We've known each other for about 10 years on a casual basis (that is, we don't actually know too many personal things about each other).

Would you lend this friend several thousands of dollars to start a new business? I've got some cash which is my emergency fund in these horrible economic times.

What would you say?

Hmm.... That's why we have banks and line of credits...

I remember reading somewhere, "I don't lend friends money. Once I lend you money, you are no longer my friend."

But, in the end, it's your call.

[hoob]

Would you lend this friend several thousands of dollars to start a new business? I've got some cash which is my emergency fund in these horrible economic times.

1. Review the investement opportunity and only invest if it makes sense.
2. It's your Emergency Fund, don't spend it on investments.
3. The only money you should ever lend a friend is for Bail and Legal Retainer.

[sexpuppet6000]

I have a friend who I see about 2-3 times a year for a chat, dinner and movie. We've known each other for about 10 years on a casual basis (that is, we don't actually know too many personal things about each other).

Would you lend this friend several thousands of dollars to start a new business? I've got some cash which is my emergency fund in these horrible economic times.

What would you say?

To start a business?!?

Maybe if they proposed the idea to me and I thought it was profitable, I consider investing in the idea. But I wouldn't loan someone money on a basis that they think they have the best invention since the Big Mac.

[DanielCarrera]

Bad idea. Most new business ventures fail and loans regularly strain friendships. Chances are overwhelmingly that you will lose both your money and your friend. And if you don't even know the guy very closely, you have even less reason to go on such a risky venture. So no, don't lend money. He can get a line of credit for more than $1,000.

[nobody1234]

Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

[nobody1234]

A loan, never.
An investment, maybe if you are willing to accept the fact that you may not see that money ever again (like any investment). You might invest if you think it is a good/great investment opportunity, but keep in mind that if it was that great your friend would a) be able to get the money from a bank, b) need much more then a couple thousand dollars.

[NUTS]

I have a friend who I see about 2-3 times a year for a chat, dinner and movie. We've known each other for about 10 years on a casual basis (that is, we don't actually know too many personal things about each other).

Would you lend this friend several thousands of dollars to start a new business? I've got some cash which is my emergency fund in these horrible economic times.

What would you say?

No on several counts

1. its a good way to break up a friendship
2. unless you have iron clad guarantees -no again
3. is it why they have come to you, because they cant get it the normal way - again no
4. you said "I've got some cash which is my emergency fund in these horrible economic times", now once you let go of this cash, you have zero emergency fund - again NO

Or like that old saying " fools and their money shall surely part"

But let me be your conscience on this to something that you have not told us.

Would it be safe to assume that this friend has told you about this great idea business - one that can make a lot of money & one which will return you handsomely for the investment?

If thats the case - the answer is still no!

The idea is that anyone that asks another person for UNSECURED several thousands of dollars for a business venture is not all mad & there is no harm in asking several people the same question. If two or three people say yes - guess what ... the person asking has no risk, will probably lose the friendships which appears not to be so important too them.

But, if you are willing to take the risk to lose the money, then I say go for it

Now if I was the person asking for the money, I would probably get two, three maybe as many people as I could to loan me the unsecured money. I would then put the money into the bank and ask the banker for a loan against the security.

If your friend is not willing to put his/her neck on the line for the venture (mortgage the house, max on the credit cards, leverage all worldly possessions and the kids) then their idea or probable success is next to zero

Hope this helps

[Muncher]

Thanks for the wise words ... I kinda knew this, but was getting a guilty feeling thinking about saying No. It's difficult saying no nicely and seeing the disappointment in the guy's face ... oh well, I guess if he's still my friend after I refuse, then I know he IS a friend.

The reason I have the emergency fund is in case I lose my job and because I can't sell my mutual funds at this time (being half the value they used to be). Yup, No is definitely the answer ...!

[at1212b]

Just say you have debts you're dealing with.

And the fact that your 'friend' had the ballochs to just ask you for a $1000 or bring it up, shows his judgement.. meaning do not hand him a dollar!

[angel_wing0]

...loans regularly strain friendships.

not just friendships, sometimes even family.

[setell]

I wouldn't loan a friend a dime. Just my principal and that's how I do things. Plus if they needed cash like the others have mentioned there are banks that offer loans and lines of credits if not than their credit card for a few thousand!

I hate it when people don't "return" your money too. They think it's ok to take months to pay you back etc. I had somebody take 2/3 months for $100. I mean $100 isn't much so why not just pay up. I know they can afford to pay up too.

[batman321123]

I don't think I'd loan several thousand to close friends, because I don't want something to ruin our friendship. My friends all know this, and if they ever do need money (even small amounts), it's given as a gift, and not a loan. If they pay me back, it's a bonus. If they don't, that's fine since I was never expecting it back.

[tng11]

I hate it when people don't "return" your money too. They think it's ok to take months to pay you back etc. I had somebody take 2/3 months for $100. I mean $100 isn't much so why not just pay up. I know they can afford to pay up too.

+1

Too many people I've lent $10 or $20 never pay up... even though they have the cash on them they always take months or plain never pay up. I probably have a 50% default rate.

[beetfarm]

A casual friend? Never. Even a close friend would be considered a slight risk on your part...but it's your money.

Personally, I wouldn't. The cons greatly outweigh the pros (if there even are any, the only pro I can think of is keeping on good terms with someone you don't even care much about).

[brunes]

I would not lend him money to start a business, instead, I would ask to see the business plan and if interested would become an investor/partner in the business (ensuring all the required paperwork was in place before handing over any money).

After all - if you think the business will fail, then why would you lend him the money? And if you think the business will succeed, wouldn't you like to be able to take advantage of it as an investment?

[bigbilly742]

never, ever lend money to friends..... that is if you want to stay friends.

[phomp]

as said many times in this thread.. bad idea.
http://media.ebaumsworld.com/picture/natedogg21/BadIdea.png

[mikeycanuk]

None. You won't get it back.

[VivienM]

I would not lend him money to start a business, instead, I would ask to see the business plan and if interested would become an investor/partner in the business (ensuring all the required paperwork was in place before handing over any money).

And, of course, making sure a lawyer reviews all the paperwork, etc.

This can get very expensive very quickly to try and prevent yourself from getting screwed.

[netriones]

If it's a good business plan and I may take a partial ownership in that business. Otherwise, tell your friend, go to the bank.

[maebach]

No no and no. Lent two very good friends money. One I had to beg for my money after two years, even then it took a year to get it back. Second one died before I could get my money back. Co-signed a loan as a guarantor for a relative twenty years ago that I completely forgot about. Its now come back to bite me as I keep getting calls from collection agencies. I didn't even borrow any money, but my signature is on the loan. :mad::mad:

[boneca]

If you have to ask then I think you pretty much know your answer. I think that it's a bad idea...especially if it's an emergency fund.

[amroache]

I watch to many judge shows to know this is a HORRIBLE idea