I am going to put this disclaimer upfront – This article is in no way meant to be an attack to those that owes me money . I am just writing a few concerns I have personally and shared by those around me about the soft loan to our fellow friends and family.
I was planning a trip for one of my team member to go wrap up a job out of town. This entailed making transport arrangements which involved money. She is travelling with a company our firm does not have an account with, and it was sort of the late for the firm to make a payment , so I engaged in a conversation to ask if she has funds available for her to pay and then claim in the next S&T cycle.
I was not expecting her to have money for such an unplanned trip in the middle of the month but surprisingly she did. This for me was impressive looking at her earnings level because I have seen people with a much higher income level that can barely make it through the month. When I ask how she manages to do that, she mentioned a few things but one that caught my attention was “No i have stopped lending people money so that they can learn how to manage their funds”. This for me was profound.
Let me define for you what a soft loan is. It is define as a loan that is made on terms very favorable to a borrower. Often it has no interest attached and has no fixed repayments terms ” other than not being repayable before the next pay day of course”. If I were to put it on my balancesheet, I’d probably classify it as a non-current related party loan with almost an element of a loss on day 1.
The thing that saddens me is that, the borrowers of soft loans do not respect the lenders which is beginning to erode trust in that market. The borrowers in many instances demands these loans at unreasonable terms such as:
- They want such money within a short period of time ( instantly) and whatever it will cost you. This might mean incurring charges for withdrawing money against the terms of your account and incurring extra charges or even disrupting your schedule to go apply for them this money.
- They want it in a given form- some except you to EFT you even if you tell them you only have cash. This is also time and money for you to arrange this deposits.
As if that was not enough, there is always an assumption that you did not need the money that is why you gave it to them. They than take it for granted by not committing to a fixed repayment terms by stating things like ” I will pay it as soon as possible, I will pay it when I get my money from XX, I will pay it when I get paid or I will pay it installments” . Here is the thing, the lender is already lenient that they are not charging you interest and yet you cannot even commit to a repayment term?
What is more disrespectful is when the term that they pay promised to pay sort of lapse. In many instances, they go quite without rendering an explanation as to why they do not fulfil what they promised. Even worst is when they give you an excuse that they first had to do ABC and ran out of money and they will see if they can maybe pay you next month.
Again, this is not an attack to my debtors, these are general concerns everyone who is lenient shares. Please get this very well and do not take it personal.
What I am trying to get you to understand is , what you are doing is indirectly impairing trust in the soft loan market. You not repaying that loan as promised will put a dent in that person’s budget and incapacitate them to help the next person who is needing help just the same way you were in need. You assuming that person has money is impairing trust in that person’s ability to trust the next borrower. You not paying back is costing the other person in interest that they could have earned in the savings account that they took to help you.
Just like my team member has stopped to lend money so that people can learn to manage their funds well, essentially we will also do the same. One day I will wake up make a decision like her, what then? The soft loan market is one that is holding society together especially in the black communities.
My plea to you , if you borrow money from someone
- Be thankful that person helped you.
- Be respectful to honour your promises
- Do not assume that person does not need the money
- Be mindful of those that are coming to ask after yoube
As soon as we get that, this market will continue and we will all leave in harmony with one another. If not, each soft loan essentially is just a peace eroding , friendship destruction transaction, which is a ticking bomb waiting to explode.
( These are days when I explain what my Dad meant with my name ~ the one who is warned in advance has an opportunity to prepare to fight the battle”)