If one of your close acquaintances asks for some money from you, without a timeline or guarantee of returning it, how much would you cough up?


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A close friend (or a mere acquaintance) of yours approaches you. States that he/she is badly in need of some money. And you oblige. In the back of your mind you know that the money would be returned to you, but there's no guarantee.

For what causes would you oblige?
Would you cough up a small amount for a start-up business?
Max how much would you cough up?

(I know the extent of amount would vary depending on the purpose. Hence, feel free to cite as many examples as you want.)

Funding Equity Angel

asked Feb 8 '10 at 15:57
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Sandeep Satavlekar
325 points
  • I'd like to give another perspective. Would you like to be a 'tiny Angel' to your friend in his/her venture? Now you have all the rights to see how your contribution is being utilized. The 'friend' would also be glad to provide you access to his/her accounts. You are in the same shoes as that of an established Angel. The only difference is that, instead of pouring hundreds of thousands of (units of) money, you are putting a few thousand. The friend is more than willing to get into all the legal formalities with you. Would your answer be different now? – Sandeep Satavlekar 9 years ago

3 Answers


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Sandeep,

There was, at one time, a man who I would have given any amount of money at any time, for any reason, and never have lost a minute of peace worrying about re-payment. Very special circumstances, and he's long dead anyway.

Having grown cranky with age, and cynical by abuse of my trust, I've gone to the 'trust but verify' philosophy. Especially in business, I've learned that 'friendships' ALWAYS rely on some kind of cost/benefit calculation. Is the amount of money in discussion more valuable than the 'friendship'- to you? - or to the friend?

If I 'coughed up' it would be an amount smaller than the 'cost-benefit' calculation I assume my friend held, and as much as I felt comfortable with. Anything larger than that would require a series of very strong 'ties' around the friend's gonads.

Hope this helps

answered Feb 8 '10 at 16:52
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A Business Mentor
215 points
  • I understand that there have to be very strong 'ties' around the 'gonads' :) but the friend in question may not be asking for any specific amount. Voluntary 'contribution' to any extent (however small) could be welcome. – Sandeep Satavlekar 9 years ago

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Personally I would never take money from a friend unless the payback terms were clearly defined. You can't put a price on friendship and money has a way of messing up relationships. That said, have you looked at services like Virgin Money for Social Loans: http://www.virginmoneyus.com/. They seem like a good middle ground for structuring friendly loans.

Has anyone reading had experience with these?

answered Feb 10 '10 at 02:43
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Ashmaurya
140 points

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I have a personal policy of not loaning money to anyone. Mainly because it can damage relationships. Every time you come in contact with that person, it's possible that the topic of that money could come up. It could potentially put stress on the relationship. If the person never pays you back, you may begin to resent the person. In short, I wouldn't do it.

Here's what I would do. Think of an amount that you can just give to the person. Do that instead. If you can't afford to give anything away, then I would say you can't afford to lend it anyway.

Probably not what you wanted to hear.

In short, I agree with thoughts of The Simple Dollar.

More resources:

  1. I've Loaned Money to a Friend and It's Eating Me Up Inside
  2. Six Points of Advice If You’re considering Loaning Money to a Friend
  3. Your Friend Or Family Member Asks You For A Loan: What Do You Do?
Good luck.
answered Feb 10 '10 at 10:15
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Jp Richardson
151 points
  • JP, For some reasons at my end, I haven't yet got an opportunity to visit the links you have posted here. But I'll surely comment and give you a feedback once I go through. Thanks for the links, though! :) – Sandeep Satavlekar 9 years ago

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