"Neither a lender nor a borrower be." - William Shakespeare. This is advice that is a little over-simplified. If someone asks you gor a loan, examine what it is for. If the project looks like a winner and the person has a good track record, offer them a convertible loan. (No, this is not a loan for a sports car !).
A convertible loan is a properly legally binding loan agreement with repayment schedules and details all worked out and forming part of the agreement.
If the project is successful and profitable, you have the option to convert the debt (to you) into equity (shares) in the project and this will give you a share in the profits.
Two things to remember about convertible loans are that you should make sure that your equity is made up of VOTING shares, and that the loan is SECURED against their property, so that you will still get paid if anything goes wrong. This degree of due dilligence will sort out the wheat from the chaff.
Wednesday, July 20, 2011
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment