A friend just asked to borrow a lot of money

[shiznitz]

I have known the guy since college.  I wouldn't say we are close as we don't regularly socialize together, but I see him a few times a year.  He has (or had, apparently) a good finance business.  He called me last night to ask for help "in the short term".  The amount of money he wanted to "tie him over for a few months" is greater than the US median annual income.  I could afford to help him technically but if he reneges on repayment then it would obviously hurt and my wife would be pissed.  I discussed with the wife and she said no way.  My Dad said don't do it.  Anyone I ask says don't do it.

He said that he added people to his business to grow it and then revenue actually shrunk and he has been too slow to trim staff.  He claims the losses suffered this year mean a tax refund 5-8x the amount he wants to borrow is coming.  He has a residence and vacation property which he says he has already tapped.  I suspect he needs cash more to sustain his lifestyle (3 kids in private school) than to support his business which is capital light - mostly rent and payroll.

I am not going to do it.  No one I trust thinks it is a good idea.

But I want to hear any stories from this group - 1st hand, 2nd hand, gossip or hearsay - about this kind of situation and whether it ended well or not.

[schild]

With most folks, in fact, I'd say 99.9% of them, don't expect to get back any of the money you lent away.

That bitch needs to sell his second house. What a doucher.

[kaid]

I have loned friends money twice. I think the biggest loan I did was about 15 grand. This was somebody who is pretty much my best friend in the world and have known since we were kids. His wife got a once in a lifetime job opprotunity out in california for a really large salary but they were having a problem with the old chicken and the egg situation. They needed money now so she could get out there and get setup so she could start cashing in on that large salary. I basically gave them a loan so she could get out there get a used car and an apartment and get setup so that they could work the move to get him out there.

It worked out fine in the end for me wound up getting repaid in about two years after I made the loan.

One reason I felt less concerned with this was these two are pretty much my backup plan incase life really fucks me up and I have dibbs on their spare bedroom in case of disaster so helping them in a tight spot likely will wind up with them eventually helping me in the same way if the poop ever hit the fan.

I am single though so I had no wife to have to pass this through and even with all the reasons to do it there was some risk involved and that is a shitload of money to just hang out there. If you are married and the wife says no I would not do the loan. Money matters are a great way to break up a relationship and if the loan went bust you would be not only out of money but may find yourself with a collasal amount of wife agro.

[Threash]

No, not unless you are incredibly rich and can afford to burn the money.

[Pennilenko]

Several years before I even met my wife, I loaned a large sum of money to a very close long term friend and it ended very poorly. Which is why I arrived at my current attitude towards lending friends money. That stance is to not loan money to friend under any circumstance. I say if you value your friends, just give it to them, with no expectations of repayment. That is the only way it can work out well for the friendship in the end. This way if they don't pay you back no harm no foul, and if they do pay you back then its a sweet bonus.

This very experience is the reason why I trust heavily in my wife's wisdom and outlook regarding my relationships with people that I care about.  I am generally quick to make choices that might burn me badly in the interest of being loyal. She helps balance that a great deal.  If a man doesn't value his wife's wisdom and feelings, then why marry in the first place?

[schild]

When I first moved to Austin I racked up a sizable debt and haven't been in a place to get rid of it since moving here. It's pretty much the ONLY source of stress in my life and I have no clue when I can pay it off/ever. But I'll never ask for money to help pay it off because if I clearly can't kill this debt and wouldn't want to put that on a friend.

Basically, what I'm getting at: The moment he asked for money, he stopped being your friend.

[shiznitz]

That bitch needs to sell his second house. What a doucher.

Yes, but that can take months and he needs money now.  Clearly, though, he has waited too long on the hope that his business will turn.

[Pennilenko]

Yes, but that can take months and he needs money now.  Clearly, though, he has waited too long on the hope that his business will turn.

Loaning delusional people money is even worse than loaning money to a friend.

[HaemishM]

I am not going to do it.  No one I trust thinks it is a good idea.

Yeah, that's the way to approach it. Loaning this motherfucker money sounds like a slow, agonizing way to end a friendship. The quicker way is to say no, but sounds like you'll be better off in the long-term.

EDIT: Also, if this motherfucker needs to borrow money from a personal friend to pay for his BUSINESS EXPENSES - seriously, fuck him. There are bridge loans, lines of credit and all sorts of options out there for a business to get money at super-low interest rates to tide them over in rough times. If he's either exhausted all of those, or gotten them with the 2nd houses and shit and so can't use that property as collateral anymore, you are basically saving his business from going Chapter 11 and reorganizing. That makes you an owner/investor, not a friend loaning money. Very different terms of things. That shit is business and he's coming at you like it's personal.

Fuck that. Dump this shithead.

[Ghambit]

Ask for a large chunk of his business as collateral; or, maybe require large time slots at one of his vacay homes as interest.  I'd like to simply say "no, dont do it" but fact is there's a lot of ways to skin this cat.  Schild is right that he's not a very good friend asking for the money in the first place... so, going from there it wouldn't be much of a stretch to treat it much like a collateralized institutional loan.

I have no sympathy for finance guys and brokers though; sorry if you're one of them, but...  I just don't.

[Ingmar]

I'd tell him to stop wasting his money on private school, first.

[apocrypha]

The only way I ever lend money to people is if I am able to consider it a gift from the outset. That means I need to be able to comfortably afford it *and* have enough love for the person to be prepared to give them whatever amount of money (or anything else) it is.

That way it's just a positive experience. If you don't get the money back then that's fine, you never expected to. If you do get it back then it just feels like another gift in return.

I learned that this was the only way to safely loan anything to anyone when I was in my early 20's, mostly as a result of lending money to family members, most notably one of my brothers. He fully intended to pay back every single thing, but never, ever did. Those mistakes are an impediment to our relationship even now, more than 20 years later.

[Rasix]

Ted Beneke will never turn his shit around.

I'm not sure there's a person on this planet that I'd give any significant amount of money to. There's maybe a few exceptions, but those are corner cases I hope never to encounter.   And in those cases, I would not expect to see the money again.

[Hawkbit]

The #1 rule of loaning money to people you know:  Don't expect to get any of that money back.  As long as you're okay with that, then go for it.

As a real life recent example, one of my wife's friends came over a few months ago bawling about not having enough food to put on the table for her kid.  So we gave her $100 to get her through to next paycheck.  The very next day she posted on fb that she bought a new coffee table...

Luckily my wife's first words were "Well, I learned my lesson."  yay!

[satael]

If a (good) friend asked me money to help him over a rough patch in his/her personal life (and there was a reasonable sounding plan to pay it back eventually) I'd probably loan it if it wasn't too much.
I wouldn't loan the money to help his business unless I had some (real) collateral since any business that can't get money from the bank for the sum I could loan isn't financially sound.

[Sky]

There's a word for someone with a vacation house living beyond his means who asks you for money.

It's not 'friend'.

[Yegolev]

I'm descended from scots, so I don't give money to anyone.  Maybe if it's a GOOD friend and the trouble wasn't his fault.  Maybe.  More likely I'd give advice.

[Ghambit]

There's a word for someone with a vacation house living beyond his means who asks you for money.

It's not 'friend'.

... to take this further, most people of significant wealth have no real friends, both because they constantly live exponentially outside their means and/or give loans.  This goes for family as well, sadly.

Note: it's different if you're both taking a financial risk together on something you both want to do.

[Hammond]

Basically, what I'm getting at: The moment he asked for money, he stopped being your friend.

Truer words were never spoken. I have never loaned friends money and I doubt I would. I have given gifts, advice and personal time to friends in need but never money.

[Strazos]

Recently loaned a buddy of mine some cash. He's in bad shape out in Portland with Lyme's Disease and he's not able to get disability while finishing up a county degree, and him and his fiancee were about to get evicted. She's supposed to be getting a decent job early 2014, plus a decent tax refund, so I said fuck it and wired some cash.

Granted, he was only asking for $500 and I sent $1000 so it's not a super big deal. Also, I've known him for more than 20 years. I don't really expect him to pay it back, but good for him if he manages it.

[schild]

I'd like to elaborate on what I said above:

If a friend needed cash, I would just give it to them. But that comes with the caveat of him not working in finance and having 3 kids in private school, a second home, and a host of other solvable self-inflicted ruinous problems.

[Tebonas]

You never loan money to friends, you give it to them and when they return it back you are pleasantly surprised. If its not money you can do without, you don't give it.

Even if he was your friend now, he wouldn't be anymore after you have to ask him when you get your money back for a while.

[Xuri]

The #1 rule of loaning money to people you know:  Don't expect to get any of that money back.  As long as you're okay with that, then go for it.

As a real life recent example, one of my wife's friends came over a few months ago bawling about not having enough food to put on the table for her kid.  So we gave her $100 to get her through to next paycheck.  The very next day she posted on fb that she bought a new coffee table...

Luckily my wife's first words were "Well, I learned my lesson."  yay!

Well, duh! She obviously needed a table to put the food on, as well. :P

[Numtini]

Gods no. Count the silver when he leaves the house.

He's already tapped the vacation home = he has lost the vacation home.

The tax return thing doesn't sound right either. If your business is going down, can't you adjust your estimated tax payments to compensate?

[Ceryse]

I've only loaned money to a friend once, and that was just leaving high school when my best friend needed a large sum of cash to bail his little brother out of some serious trouble that he didn't want their parents to know about, as well as to finance his trip and first few months living in New York before his scholarship would kick in. I told him it was a loan, but never expected re-payment. The loan pretty much cleaned me out and was one of the contributing factors to a serious impact on my life, but I would do it again given the situation, but he was the only friend I've ever had that I would have loaned money to.

Much to my surprise, about six years after the fact when he moved back here, to take care of his parents, he re-paid me the entire sum, with a bit of interest, over the next couple years. His fiance was livid he was repaying me, as we hadn't kept in touch and it was a fairly large amount of money. Almost ruined their relationship (and she still hates me, but I think that's more because I'm an asshole than the debt).

In general, you never loan money to anyone and expect repayment, but rather give it. If they don't repay the money you expected as much. If they do.. its a nice surprise. In your case I'd tell him to sell a kidney before I'd even consider giving him anything.

[Paelos]

1 - Request the tax returns from the prior 3 years.
2 - Request the current financial statements and the prior 2 years.
3 - Compare.
4 - See if the guy has any assets at all that aren't related to office furniture (my guess is no since he's a finance guy)
5 - See what loans he's already got on the business.
6 - Tell him the only way you'd consider it is if you were a preferred stock investor. No loans.
7 - Watch the freakout when you even dare to ask for this information.

[TheWalrus]

Loan him the money. Post the results here.

[Ironwood]

Fairly sure no-one needs to hear my opinion here.

 

[Ghambit]

Loan him the money. Post the results here.

 

[Samwise]

There's a word for someone with a vacation house living beyond his means who asks you for money.

It's not 'friend'.

Is it 'cockwomble'?  It's 'cockwomble,' isn't it.

[schild]

There's a word for someone with a vacation house living beyond his means who asks you for money.

It's not 'friend'.

Is it 'cockwomble'?  It's 'cockwomble,' isn't it.

If Paelos had made this post I could've made his title "Accountant Cockwomble." Thanks for nothing.

[Paelos]

Again I'm no help. It was either that or Accountant Bawbag.

[Ironwood]

Both those titles may contain traces of Ironwood.

[Rendakor]

Loan him the money. Post the results here.

Then when the friendship starts going south, consult Nerf for advice.

[Samwise]

Remember to take lots of pictures and buy a dog, not necessarily in that order.