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Loan to a friend
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Point taken about discussing with her directly.
Thank you all for your input.
You can ask for the money back, but that might antagonize them as they may think you don't trust them to do what you had already agreed. If they are flaky enough that they would use the money for something outside your "mutual understanding" then they don't care what you think anyway.
A loan based on 'mutual understanding' is fine until such time as trust evaporates, and that is presumably now the situation, or you wouldn't be asking this question.
As the lender, your only concern should be timely repayment, not how the money is invested.
1. Was the loan agreement specific about the purpose of the loan?
- You say “Start up costs incl basic fit out of shop” - whilst “basic fit out of the shop” is clear - reference to “start up costs” is quite general and could arguably include producing sauces to sell in the shop...
You say there was no ambiguity about what the loan was to be used for because of extensive e-mail communication but if the specific purpose was not set out in the loan agreement then there could well be ambiguity.
2. Did you have an agreement that the lease was to be signed by 1st May?
- unless you had an agreement that the shop lease was to be signed by 1st May it’s hard to see how you can justify demanding the loan back by that date - particularly as the delay has been outside her control. I assume she has kept you up to date on the situation.
3. New agreement?
- Yes, you could suggest a new agreement given she was due to start repaying your loan in May 2021 and may not be able to BUT given the current situation it seems to me that you would just need to amend the payment terms to start later rather than enter into a brand new agreement.
4. Are you aware she has used the loan for something else?
- Assuming the loan agreement was VERY specific about what the money was to be used for AND if you know for sure that she has used the money for something else - you could say she has breached the contract and demand your money back.
If your main concern is that she may use the money for something else - the best course of action may be to have a discussion about current status + suggest an amendment to the payment terms given the Covid situation and that the shop is not open. During the course of the discussion you can ask about the “new” business + then ask if she wants to enter into a new agreement in relation to both businesses or if the money is still sitting into her account and it is just the repayment terms that need to change.
Speaking to the solicitors might see what the holdup is.
Yes, talk to her.
Update: As 1st May is looming and her answers about progress with the lease are sketchy. Saying she has authorised her solicitor to sign the lease on her behalf why still the delay? Something doesn't feel right. Anyway I asked vis email for the full loan back and new agreement to be signed once the lease is signed. She has got back saying she will honour the repayment date of 1st May. So basically ignoring what I have asked. I will be speaking to her nearer the time.
There is another problem in that she receives Universal Credit and with savings/ capital over £16,000 she will lose that benefit. It's better for her financially to give it back until the lease is signed.
After the call you can always confirm the agreement by email so you have written confirmation, but dragging this out by backwards and forwards email is only going to cause frustration.