Three times in my life I’ve made a loan that I never got back. About 10 years ago I gave a ten thousand dollar loan to a friend who was starting a business. They never paid it back. A few years later, I gave $5,000 to a young man who promised to return it in a few months. That never happened. A few years after that, I made an $100k+ investment in a restaurant for a 20% return of the profits. Gone.
What did I learn?
- Be wary of getting into a start-up with a person who has never run a successful business before.
- Be wary of not having a controlling share in a business.
- When you give a loan, be prepared not to get your money back.
- You may choose to tell a person that you will give them money because you do not give personal loans.
Some say, “I never give out personal loans.” You may want to do that. Personally, I’ve seen how loans can be a huge blessing. One family related to me was blessed for a period in their lives, and they helped so many people. Even to this day, I meet people who got loans from them, and you can see the blessing. Early in my life I borrowed money a few times, and it was a blessing. I was also faithful to return the money.
Should we give loans? Definitely do not do it if your goal is to profit from the interest. If you want to give personal loans, do it to help others. If you want to benefit from the interest, talk to a financial advisor and put that money in the market.
Should you give a loan to help someone? Yes, if you have the means, but know that frequently it will not be returned. Factor that into your decision.
Another point to keep in mind: when someone does not return your money, even if you are okay with it, often it still changes the relationship and makes things awkward.
If the broad headline of your life is to honor God with what He gives you, then decisions become clearer.
