A friend recently complained about a colleague who
cried that his wife was going into labour and needed
a loan of N100, 000 with a promise to repay by the
end of the month. One year down the line and the
stories keep changing. In fact, the matter has
threatened to ruin their relationship with my friend
considering taking the matter to the human
resource department of the company.
How often do you find yourself in a position where
you lend money to a friend or family and never get it
back? They approach you with cries of desperation
and promise to pay back after a specified period
only to come up with stories when its time to
repayment time. I get approached too and often fall
victim. I have learnt from being a victim and often
use the following tips to avoid falling again.
1. Number one rule is to remember it is easier to
borrow and lend than to return after lending.
If you have this at the back of your mind all the time
then your default response will always be a NO. But
there are cases that require compassion too. When
they arise your adamant nature will warrant that
you reverse the notion by making it difficult to lend
and easier to refund after lending.
2. Create a barrier by introducing third parties to the
People who borrow money or seek your money for
investment always come with compelling and
convincing tales. They are also very much in a
hurry to get the money from you giving you the
impression that all hell is about to let loose if you
don’t act quickly. The problem however is that,
when it comes to getting your money back, that
urgency is suddenly transformed into pestering. So
for those who are vulnerable to sweet talks, one
way of deal with a suitor is to refer him or her to a
third party. Tell your borrower you understand the
situation and want to genuinely help but your lawyer
or accountant has to work out the details.
someone else who is neutral and less biased is
suddenly the decision maker in all of this. Whilst in
real terms the final decision lies with you, a third
party may help you see other risks that you may
have missed and also put the borrower under
pressure to convince another person.
3. Ask for a guarantee or security.
Just as above, to make it difficult for the suitor or
borrower, give them conditions that must be fulfilled
before you part with your money. For example, ask
for a collateral or a guarantee from a recognised
cleric. You will be shocked that even a common
request for an application letter can often be difficult
for a borrower to produce which in no small
measure sends them away naturally. A borrower
who doesn’t show seriousness to meet this
conditions will more often that not break their
promise to refund.
4. Confirm as reasonably as you can proof of need
for the money.
This can be difficult and not applicable in some
cases but if applied it can help avoid any incidence
of fraud or default. For example, if they come to you
for money to finance a Local Purchase Order,
simply ask for a copy of the LPO. If they do not
have it then don’t give and if they do, ensure that it
is the borrower’s name that is on it and not a third
5. Obtain quasi security documents like post dated
Most loans to friends and family hardly get covered
by collateral. However, you can still request for
other documents such as post dated cheques,
promissory notes etc. While they are subordinate to
registered collateral such as land, they can be quite
useful in terms of settlement. A bounced cheque for
example is an offence punishable by law. A serial
borrower who issues a dud cheque is therefore at
risk of going to jail which serves as a good
6. Keep in touch regularly and pester where
Most of us make the mistake of not keeping in
touch with our debtors. Because they are friends
we hesitate to bring up the issue even when we are
constantly in touch. Finance experts advise that we
continue to pester and remind our debtors that they
owe us. This creates a lingering sense of
responsibility, which can only help you recover your
7. Never lend to a previous defaulter.
Once beaten twice shy. Ironically borrowers are
often shameless and will not think twice about
coming back to you again for another loan. If the
borrower is someone who never repays or takes
time to then you may do yourself a lot of good by
not lending to them again no matter the
8. If you are soft hearted then only lend what you
can afford to let go.
Some of us are very vulnerable to bad debts
because we are just too compassionate to say no.
However, being compassionate does not mean we
loose all sense of responsibility. If you are
compassionate then just lend what you can afford to
#WiseUp my goodhearted people