Loan

In The Personal MBA a loan is an agreement to let a borrower use a certain amount of resources for a period of time in exchange for a series of payments over a predefined period of time, equal to the original loan plus an interest rate. It is one of the Twelve standard Forms of Value (Form of Value #9 of 12). Loans allow people to benefit from immediate access to products or services that would otherwise be too expensive. Loan are interesting to the lender because they provide a way to profit from excess capital.

Key Points:

• A loan is an agreement to let a borrower use a certain amount of resources for a period of time in exchange for a series of payments over a predefined period of time, equal to the original loan plus an interest rate.
• The keys are:
  • Have money to lend.
  • Find people who want to borrow that money.
  • Set an interest rate that compensates you for the loan.
  • Estimate and protect in case the loan is not repaid.
• Loans allow people immediate access to products that they couldn’t purchase outright.
• Loans are beneficial to the lender by benefiting from excess capital.
• It’s critical to identify how risky each loan is, and take the appropriate steps to protect the loan going sour.

Questions for Consideration:

• Does delivering value via lending assets to others make sense for your business idea?
• If so, what do you need to plan for to make it successful?

Source: http://book.personalmba.com/loan/