Loan to a friend

007james

Would really appreciate some advice...
After researching all the potential problems that can arise from loaning money to a friend, I decided to loan money to a friend to open a shop. She never asked for the money but having seen her entrepreneurial spirit and how she had set up her own catering business with little resources, I felt inspired to help her. 
We agreed on an amount which would cover her start up costs incl basic fit out of shop. She found a low rent council owned premises and they accepted her offer in Aug 2020. We agreed terms that she pay me back starting May 2021 over 3 years. I assumed she would have started trading by then. Due to COVID and other excuses by an inept council she still hasn't signed the shop lease. I also feel she is not doing enough to hurry the process along. In the meantime she has started to produce some sauces which she is having some success with which is being sold in other shops and a potential wholesale deal. 
This is my question: If the shop lease is not signed by May 1st, shall I ask for the full loan back so that we sign another loan agreement with new repayment terms? I am expecting the full balance to be there as she hasn't signed the shop lease yet. Her accountant witnessed the last loan agreement as I wanted to do everything right. I suppose my fear is that she may start using the loan for her other business ideas rather than the shop which is what I loaned the money for. There was no ambiguity about what the loan was for and extensive emails between us regarding the shop lease. I loaned for a shop as there is a gap in the market for the produce she will sell and I know she will make a profit. 

[Deleted User]

Does your agreement allow for calling in the loan early?

Edi81

Did you seek legal
advice prior to lending it?

kazwookie

You can ask, but I doubt you will get any of it back at any time

Sorry

007james

kazwookie said:

You can ask, but I doubt you will get any of it back at any time

Sorry

Why do you say that? The first payment is not due yet plus over the last 2 years, the person has proven their worth by paying back any money I lent them promptly plus any other debtors, providing me with proof. 

007james

Deleted_User said:

Does your agreement allow for calling in the loan early?

I will check. 

007james

Edi81 said:

Did you seek legal
advice prior to lending it?

Yes I did. However it's a no interest loan so no amount of legal advice will help. Basically when you lend to a friend you lend on trust. I concentrate more on the character of the person I'm lending to as I know what problems money can cause. I have lent before with no clear repayment terms and it took a while but I persisted with reminders and eventually got every penny back. This time round, I waited 18 months before deciding to lend after coaching her on debt and paying off what you owe. I know the risks and I was prepared to take them. 

007james

Deleted_User said:

Does your agreement allow for calling in the loan early?

I've checked and there is no clause although my friend clearly knows what the loan is for. I lent before for a shop lease which fell through and she returned the whole loan immediately. I believe she will pay back the entire loan but I would advise anyone to really think carefully about who you lend to. 

[Deleted User]

In that case, you're entirely reliant on if she wants to give it back or not.

macman

You cannot in reality enforce how she spends the loan-all you can do is act when the repayments are due.

-taff

What do you expect her to do to hurry things along? If the council aren't ready ot able to get this sorted, what makes you think phoning and phoning is going to make any difference?

If there's no early repayment clause, then it's up to them when they pay. It doesn't matter what the friend 'clearly knows'. 'Clearly knowing' is not part of a loan agreement. I hope this friend pays you back. Although, if you are such good friends and they have paid you back before, why don't you talk to them about this intead of here?