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View Full Version : How to structure an agreement between the lender and the borrower?



tenant13
12-05-2012, 10:33 PM
Friend of mine wants to start a food truck business. She has an expertise, time, enthusiasm and good connections. I have the money but no time or interest in being involved.I decided to lend her 50K for 3 years - 5% interest annually. If she manages to pay me off early, then I'll only collect the interest for the actual time the money was borrowed. I don't know however how to deal with the possible business failure. The simplest thing would be to just buy the truck and the license, let her run the business, keep the profits and then sign the truck over to her once she has the money to buy it from me. The thing is the mobile food vendor license must be issued for the person actually operating the truck - that would have to be her since I don't want any headaches. But that license and the truck is my collateral - in the worst case scenario I could sell them.
Should we just hire a lawyer and come up with some kind of agreement/promissory note that would take care of this scenario?

MyITGuy
12-06-2012, 12:50 AM
Should we just hire a lawyer and come up with some kind of agreement/promissory note that would take care of this scenario?

Absolutely.

KristineS
12-06-2012, 12:11 PM
Definitely hire a lawyer. There may well be ramifications and details you two haven't thought of that could cause problems. Also, even if you're friendly now and even if you stay friendly, having a iron clad agreement drawn up by a lawyer can save you a lot of headaches down the road.

Ideally, you should each have a lawyer, so that each party is assured they're getting a fair deal, but one lawyer is better than none.

tenant13
12-06-2012, 09:06 PM
What kind of a lawyers should I be looking for?

MyITGuy
12-07-2012, 12:10 AM
What kind of a lawyers should I be looking for?
Likely someone who deals with Business Law, IMO.

jim.sklansky
02-02-2013, 02:49 PM
Creditors Rights: Creditors' rights concern the application of contract law and state law to protect the interests of creditors or secured parties in commercial loans, secured transactions, installment contracts, promissory notes and consumer credit cards. Legal issues include attachment, perfection and priority of security interests or collateral or other debtor assets upon default or bankruptcy, foreclosure procedures and public sales or auctions, negotiation and settlement, deficiency judgments, and attachment and garnishment proceedings and repossessions. See Debtor and Creditor.

AlexB1
02-04-2013, 03:16 PM
There are a few services out there that help you "lend to a friend". I've never used them, but they might be a cheaper / simpler route than getting lawyers involved. Although having lawyers on both sides would be ideal it will also be expensive and time consuming. There's always a tough balance with friends between over-lawyering and under-lawyering... (as a lawyer I'm pretty confident in saying people often over lawyer!)