I have some extra cash that I'd like to use to earn cash. Does the following proposal seem good, and if so, are there investor/borrower groups or online communities where I could find startups who need this type of funding?
Unlike so many angel investors, I don't want equity; I want my money back. I am an accredited investor.
If your primary goal is to make more money, then I'd say the following:
If you want to invest in startups, you might better look for an investment fund that does this for you. By investing in the investment fund you are still betting on startups, but you'll very much spread the risk of losing a large part of each loan if several startups fail to pay you back (there will be much more companies, so a few will not harm the fund too much).
Now, if your primary goal is not to make money but rather help out startups, you should checkout Kiva. There are currently 3,389 loans available to small startups and entrepreneurs mostly from developing countries. Average payback rate is 98.97%, so you'll in fact lose about 1% of your investment, but with that kind of money you have available you might make a huge impact on many people.