Loan requested - Business startup

[slu2]

So I finally got real today, and I spoke to a lender that we know.
Looks like I will be borrowing fiat to get this business going in the right direction.
I really tried to stay away from fiat and traditional lending.   

I got reacquainted today why I stay away from traditional funding.    On top of a 10% interest rate, I also have to pay about $4000 lending fees.   Plus they wouldn't lend me a small amount of money like $30k, I had to take MUCH more than that, just to qualify for the loan. 

Your BTCjam listing had an APR of over 60% which is much higher then 10%, IIRC it was actually around 68%, and the estimated loss rate was ~64%, giving the lender an effective rate of ~4% (but you would still need to have paid the entire 64%

Although I find it unlikely that you would not have qualified if you took out a smaller loan, if the loan amount was $40k (which is not a *lot* more then $30k, but we can use that figure for illustrative purposes) then a $4k fee for taking out the loan would work out to 10%, and would increase the APR by 40% if you are only taking out a 3 month loan. Add the 40% to the 10% interest rate and you only have an APR of ~50%.

I promise you that bitcoin related lending will not be as efficient as fiat based lending for a long time due to the irreversible nature of bitcoin and the diverse geographic backround of potential borrowers and potential lenders

Actually, another benefit with this fiat money lender, is that he is private and we spoke to the source instead of a broker.  We got him to finance us for up to two years, but we are going to pay him much sooner than that to save money on interest.  Its spread out over a 30 year amortization period, with interest only repayments.   For the purposes that we are using it for, this is a great kind of load for us.  It's very flexible.   

Since I retired due to a car accident in 2013, I don't have a lot of credit options.   I have a decent 6 figure income, but nothing really documented yet such as a w-2, most of my income is stated income until next tax year comes around.    For a lot of years I worked for someone else, and I wasn't investing.  So I don't have a lot of recent activity on my section C of my tax forms any more, like I used to.

So now I am building credit and going back to entrepreneurial endeavors.    It's tough going from being a 9-5 employee for 6 years, to going through the pangs of recovering from a really bad car accident, to then being self employed again all of the sudden.

But we have done this before, and we'll do it again.  It's a process.

If you have a 30 year repayment period then your effective interest rate is a lot lower then what you would have paid on BTCjam. I am glad you were able to save money by getting a fiat based loan.

This also sounds a lot like a mortgage and sounds a lot like you got a "liar loan" that was very common during the mortgage/housing boom period of the mid 2000's

I think they call this guy a hard money lender by standard definition.   He does have decent rates.  It is a sort of mortgage, but rather its a collateral based business loan.  I own a few pieces of real estate.  I just don't typically involve banks with loans or purchases. 
This will be the first time we have had a mortgage since 2007.    I don't even utilize credit cards.  Never in my life have I gotten a credit base card. 

So I had a few things working against me credit wise.  It was just fortunate that I have some collateral.

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[slu2]

If you have a 30 year repayment period then your effective interest rate is a lot lower then what you would have paid on BTCjam.

The one thing appealing about BTCJam is they don't charge all of the loan origination fees and such.   I save $4000 right off the bat using BTCJam.   It balances out.   I just prefer coin over fiat.

[crazy-pilot]

If you have a 30 year repayment period then your effective interest rate is a lot lower then what you would have paid on BTCjam.

The one thing appealing about BTCJam is they don't charge all of the loan origination fees and such.   I save $4000 right off the bat using BTCJam.   It balances out.   I just prefer coin over fiat.

BTCJam charges an origination fee by only giving you a certain percentage (I believe 2% but I may be mistaken on this) of the loan as funded by lenders. I agree that this is less then $4,000 on a $30,000 loan, however it is something, also the APR (which is the effective rate that you pay, or the cost of the loan) is certainly lower with you getting a mortgage then if you were to have gotten an unsecured loan.

Some of the $4k was likely title costs which you would have had if you had used someone on here to lend you with title to your property

[slu2]

if the shit hits the fan on your business, you will have a ton of investor debt. what will you do in such a situation?

It's a moot point now.  I got financing.   I don't have any debt right now, until this loan closes in 12 days.   I own my house and my cars, and I have an income producing multiplex.    So when you say  "you will have a ton of investor debt".   I won't have anything unsecured at this point, and I am not borrowing "a ton".   In fact my property is valued at 5x what I am borrowing and I wouldn't even be borrowing as much as I am, except they won't do micro loans less than $100k usually.  They made a special exception for me.  They would have loaned me all 100K, but I was only asking for $30k.   They wouldn't let me go as low as $30k, so I had to borrow a bit more.  Quite a bit more actually.  

Overall, a loan at BTCJam would have been better than having to take out this huge loan.   But dems the breaks.   Either way, we are putting a shitload of the loan back to the principle, so we have less interest over all.   We only needed $30k, so that's what we will walk away with.    It may look good on our credit too, Im not sure.

[slu2]

Some of the $4k was likely title costs which you would have had if you had used someone on here to lend you with title to your property

Exactly, there is a shit load of costs that all add up to $4000.   Then the interest on top of that.   It's a pretty spendy loan.   

This has inspired me with a business that loans BTC on titles and deeds though.   I am really serious about putting a business like this together now.

[slu2]

Thats another thing about traditional lending.  In this case we are closing in 2 weeks.  While that seems fairly standard.  Its really annoying actually.   I have projects that are going on at my 4 plex, that need funding too, and we are running out of good weather to do some of these projects.   BTCJam definitely has the ability to fund loans faster than most traditional lenders.

I think with a title loan company, we could get bitcoin to people after an application, some basic investigation on their identity and such, and then they would need to overnight the title to us for a 24 hour turnaround on a title loan.   

This would need two parts.  The loan processing department and an escrow service.   I will see if I am able to fund development of some software to manage this kind of an operation.  It would be a great benefit to the community, and very profitable I suspect.

I'll probably offer another loan request for a small amount on BTCJam, both as a reputation building loan, and because I want to purchase a coinkite point of sale terminal, and I want to pay with BTC without taking away from my operating capital. 

So look for a new loan request by me, a much smaller loan request.