- Joined
- Aug 7, 2012
- Messages
- 70
Rep Bank
$215
$215
User Power: 67%
Anyone have experience lending private money to small businesses (not Prosper/Lending Club)?
One of my mentors shared an opportunity to help a business out by lending them some short-term cash, which is an area that is very interesting to me. I always like the Jay Abraham/The Profit approach to helping businesses for a piece of the pie. While this is purely just a lending situation, I like the idea of getting my feet wet with this type of deal making.
Before I dive too deep into doing my DD and racking up attorney fees, does anyone have any advice on structuring these types of things? I'm sure every situation is different, but any general tips on how to protect myself, terms to make sure are included, etc would be helpful.
Here's the basic background of the situation...
This is a seasonal business that booms in the winter and is dead otherwise. They are a stable, profitable company that has been around for 30+ years and continues to grow. They recently made a $5M+ investments to improve their infrastructure, which should greatly improve revenues. These improvements went over budget and now they're looking for low six figures to be comfortably prepared for their seasonal rush. They could make due without the cash, but having it would make things much less stressful.
I looked at their books for the past three years, and basically they typically produce enough gross revenue to pay back the loan with less than a single day's volume during peak season.
My mentor personally vouches for the owner and the business, so that combined with their financials seems to put this in a somewhat low risk situation. Of course who know what could happen or what may really be going on in the background that could cause them to file bankruptcy of something. From the front, everything seems pretty up and up.
Any tips to consider on how to structure this to have some leverage here if things go south?
One of my mentors shared an opportunity to help a business out by lending them some short-term cash, which is an area that is very interesting to me. I always like the Jay Abraham/The Profit approach to helping businesses for a piece of the pie. While this is purely just a lending situation, I like the idea of getting my feet wet with this type of deal making.
Before I dive too deep into doing my DD and racking up attorney fees, does anyone have any advice on structuring these types of things? I'm sure every situation is different, but any general tips on how to protect myself, terms to make sure are included, etc would be helpful.
Here's the basic background of the situation...
This is a seasonal business that booms in the winter and is dead otherwise. They are a stable, profitable company that has been around for 30+ years and continues to grow. They recently made a $5M+ investments to improve their infrastructure, which should greatly improve revenues. These improvements went over budget and now they're looking for low six figures to be comfortably prepared for their seasonal rush. They could make due without the cash, but having it would make things much less stressful.
I looked at their books for the past three years, and basically they typically produce enough gross revenue to pay back the loan with less than a single day's volume during peak season.
My mentor personally vouches for the owner and the business, so that combined with their financials seems to put this in a somewhat low risk situation. Of course who know what could happen or what may really be going on in the background that could cause them to file bankruptcy of something. From the front, everything seems pretty up and up.
Any tips to consider on how to structure this to have some leverage here if things go south?
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
