I’m looking to loan a good friend’s small business ~20k at low interest to print his art book. I’m well aware of the risk that I lose the whole amount, the book doesn’t sell, etc. Any tips on contract templates for setting up a loan like this? I’m in California, he is in Michigan. I don’t want it to be a personal loan, it should be to his company. I have an estate lawyer but not a contract lawyer, and am guessing for this amount it isn’t worth paying a lawyer to write a customized contract.

  • 4natureCannotBfooled@alien.topBEnglish
    1·
    10 months ago

    If you’re a lawyer and understand the basics of contract law, you’re probably fine to use chatgpt to draw up a promissory note and a loan agreement and then review for sufficiency. Make sure you are lending to a legal entity and not the borrower personally or you could get into consumer finance regulated territory. A personal guarantee is fine and highly recommended. Ultimately, this loan is based on character/relationship and not how enforceable it is - if you go to foreclosure on this, there probably won’t be anything to seize and you’ll just get a judgment against the borrower. If there are any assets in the company, it might be worthwhile to file a UCC to secure the loan just in case. I might look at securing against any IP in case he tries to evade creditors and roll the IP into a new entity.