private loan (<$100K) for an international business in the US
May 24, 2013 9:33 AM Subscribe
Are there any lenders in the US that fund small businesses in Asia?
Is it possible to secure a loan to invest in an international business? My cousin's family owns a solidly run business in Asia (where I am a sleeping partner). They owe close to $150K loan at a 14% APR. The loans in the US are way cheaper than that and since I live and work here, I was thinking about taking a loan to take advantage of both the favorable interest and forex rates. I'm willing to bet that the US$ will devalue over the next five years and this would be an added advantage to the savings on interest. The business does have a healthy positive cash flow and on track to repay the loan by mid 2017 or late 2016. This amount is a little too big for a personal loan and too small to attract any venture funding. Does the big green have any suggestions?
Is it possible to secure a loan to invest in an international business? My cousin's family owns a solidly run business in Asia (where I am a sleeping partner). They owe close to $150K loan at a 14% APR. The loans in the US are way cheaper than that and since I live and work here, I was thinking about taking a loan to take advantage of both the favorable interest and forex rates. I'm willing to bet that the US$ will devalue over the next five years and this would be an added advantage to the savings on interest. The business does have a healthy positive cash flow and on track to repay the loan by mid 2017 or late 2016. This amount is a little too big for a personal loan and too small to attract any venture funding. Does the big green have any suggestions?
Response by poster: Thanks, straw. This loan would be a 100% backed by the company's assets (land). I agree it's probably complicated legally for a lender due to international nature but I was thinking since I (a partner) lives in the US, the whole transaction would be domestic and since I would sign for the loan, I am the one that's accountable. It's more a personal loan with a disclosure that these funds will be invested in a company whose statements I will provide and assets that will more than cover the risk.
posted by savitarka at 10:20 AM on May 24, 2013
posted by savitarka at 10:20 AM on May 24, 2013
So to you this is a secured loan to family, but to a U.S. lender this is an unsecured loan to you. If your cousin's family defaults, they can only come after you, because prosecuting this overseas will start to cost sizable fractions of the value of the loan.
Thus you can only borrow the money at a higher interest rate than you can lend it out.
The only way to do better at this is to convince them that you're a better credit risk so they'll lower the rate you have to pay.
posted by straw at 1:33 PM on May 24, 2013
Thus you can only borrow the money at a higher interest rate than you can lend it out.
The only way to do better at this is to convince them that you're a better credit risk so they'll lower the rate you have to pay.
posted by straw at 1:33 PM on May 24, 2013
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If you start comparing to unsecured loans (credit cards, etc), that number isn't so far out of line. If you have those sorts of assets and have made a different risk calculation than their current lender, then you can loan 'em that money, but basically you need to find a lender who thinks they're less of a risk than their current lender thinks they are.
And venture funding is usually looking for a 10x or greater repayment on the loan. Any U.S. lender looking at overseas lending has to be looking at additional legal costs should they have to get involved in recovery efforts. So, yeah, 14% doesn't seem unreasonable.
posted by straw at 9:38 AM on May 24, 2013