From Frank
1.
Is interest allowable by biblical standards for business purposes?
[Frank Henry]
Yes,
interest is allowable and should be charged (at reasonable rates).
2.
Should Fred go ahead with the deal?
[Frank Henry]
It is always better NOT to lend money to friends. Mitch should not try to
take advantage of Fred's current financial circumstances, however, if Fred
has exhausted all other sources, he is ok to do the deal with Mitch at a reasonable
rate of interest.
3 What other alternatives should Fred look at?[Frank Henry] I am assuming that
Fred is "tapped out" at the bank and all other conventional lending sources. He
needs to look realistically at his potential to sell down his inventory and be able
to repay all of his debts. If this does not seem like a posibility, he may want to
consider closing his store and selling the inventory in bulk (to stop the rest of his
operating costs from running); then look at how to repay any additional liabilities
when he gets other employment.
From Hal
I don't think overstocking a bookstore is exactly the worst situation a retail store owner could get himself into. The inventory is non-perishable and has an indefinite shelf life.
1. The New Testament allows interest to be earned on money (Matt. 25:27). The misunderstanding of scriptures usually comes up when referring to the Old Testament when usury (interest) was forbidden between the brethren in the matters of money, food or anything else that was personal in nature (Lev. 25:36, Deut. 23:19 etc) Our case study is dealing with a business transaction. It is this distinction that puts the charging of interest between Christians in its proper perspective. When "loaning" another Christian money for personal use, it usually should be thought of more as a gift than a loan so if the borrower is unable to repay it for any reason, the relationship between the borrower and lender is not broken.
2. Mitch should make the decision to go ahead with the deal. If his ministry involves being actively involved in lives of his Christian brothers, it is likely he is prompted to do so by the unction of the Holy Spirit. We can assume Fred does what he does because he has the experience necessary for it which is where most ministry comes - from one's life experiences. Perhaps there is a due date on the 2nd trust deed, but that doesn't mean Mitch can't renegotiate it if it is necessary and Fred has demonstrated to Mitch that the expectations surrounding the loan are being met in good faith.
As for Sam, there are Christians who feel that "profit" is somehow a bad word. They usually are the same people who expect people in ministry to receive little or no compensation for their work. In fact, it is they who are usually the least likely to be generous to others in any regard. I sometimes think those people pull out scriptures to try to cover their own lack of generosity. "For where your treasure is, there your heart will be also." (Matt. 6:21) Mitch should be commended for stepping into a gap that few will go. If Mitch treats his resources as "God supplied", God will determine the outcome.
I like the fact that Mitch is "loaning" the money in order that Fred can learn financial discipline, not, at least on the face of it, for a return on his investment. The return Mitch gets will be far less than what Fred will gain by learning to run his store on more solid footing. In addition, Fred will be learning something he can pass on to others.
3. As for alternatives for Fred, because of the number of possibilities, I'll leave that for others whose experience is in the retail field.
From Rod
Has he been in prayer and does he feel God leading him in this direction? If so, go for it!
Fred needs cash
NEITHER LENDER NOR BORROWER BE.
Mitch was a Christian Businessman and from time to time had helped other
businessmen during tough times. Fred owned a Christian bookstore and had been
referred by another Christian to Mitch. Fred’s store had run into tough times
since 9/11. Fred had overstocked his store and needed some Temporary Financial
assistance until he could trim his inventory to their proper levels.
Mitch agreed to help on the basis
that Fred would secure the loan with a 2nd trust deed on his home and
would cover the interest lost on the money during the loan period.
When another friend, Sam,
heard about the loan, he challenged Mitch about taking security and charging
interest to a “Brother.” Mitch’s response was that Fred needed some
financial discipline to learn to repay his debts and interest was allowed for
Business loans.
1. Is interest allowable by
biblical standards for business purposes?
2. Should Fred go ahead with the
deal?
3 What other alternatives should
Fred look at?