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-Fern

Lending To Each Other

Question- I want to lend money to my nephew for a business venture. How can I do this without any misunderstandings?.......Richard B.

Answer- People to people lending is growing fast. I have seen here in Silicon Valley many middle-class "angels" who have helped people get their businesses off the ground and share in the profits (hopefully). If the amount is under $25,000 a better way to go would be to use some of the on-line lending networks. They are:

www.propser.com
www.Lendingclub.com
www.Zopa.com
www.GlobeFunder.com
www.VirginMoneyUS.com

The advantages of these sites are that they are quick, have less paperwork, and sometimes have lower rates than a traditional bank depending on your nephew's credit record.

In some cultures where there is no banking infrastructure, people to people lending was the way the economy grew. Today, microfinance loans to emerging market economies are doing terrific with a extremely low default rate. I like these microfinance mutual funds as an investment. In America, these programs have not been as successful, I fear because our ethics and the high standards to pay back what is owed is not respected.

Many non-profits are also creating ongoing support for their recipients so that the default rate is kept to a minimum. Lenders for Community Development is one non-profit where I have coached their successful alumni.

People to people lending is also a great place for students to get a loan for college.

Coaching Question- Would you lend money to a relative and how would you do it?

News Flash! -

I will be holding a FREE teleclass -The 7 Steps to Creating Your Own Financial Plan

on Wednesday, May 21th, 6 p.m. PDT. Email me (fern@wholeheartedway.com)with teleclass in the subject line to
register and you will receive the call in number.

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August 2007-- this column is produced by Whole-Hearted-Way and
provided by Fern Alix LaRocca CFP® EA