In short
Four questions. They work in every one of the four positions, they take about a minute to ask, and they are the whole of lesson eighteen: who exactly owes me, what am I holding if they stop paying, how do I get out and when, and where does the return actually come from. Ask them of the loan agreement, not of the person explaining it.
And the sentence that makes them work: if any of the four cannot be answered in writing, that is your answer.
01Who exactly owes me — and what is their name on a document?
Not who arranged it, not whose brand is on the presentation, not who you have been emailing. Whose name is on the obligation to pay you.
A complete answer names a party and a document. Anything less is an unanswered question.
| Answer | What it tells you |
|---|---|
| A named borrower, in a loan agreement with you | You are in position one |
| A named borrower, in a claim transferred to you | Position two — now check the transfer is done |
| A named company, under a note or agreement with you | Position three. Its borrowers owe it, not you. |
| A fund or scheme | Position four. Nobody owes you the loans. |
| “The platform”, “the programme”, “the fund” with no entity named | Nothing. Ask again. |
02What am I holding if they stop paying?
Three parts, and all three have to be answered or the first one is worthless: what the security is, in whose favour it is registered, and where you rank.
- What stands behind it — a mortgage bond, a notarial bond, a cession, a suretyship, or nothing.
- Is it registered, and in whose name? Lesson eight: between signature and registration you are unsecured.
- What ranks ahead of you? Costs of sale, rates and levies, prior bonds. Then do the arithmetic.
03How do I get out, and what is the earliest realistic date?
Note the wording. Not what is the term — lesson six established that the date in the agreement is when money becomes due, not when it arrives.
So ask for three things:
- The event or date that returns your capital, defined precisely enough to recognise when it happens.
- The earliest realistic date that event could occur — and then what has to happen first.
- What happens if it is late. Does interest continue? Who tells you? What are your options at that point?
If somebody quotes you an average — “these usually run about fourteen months” — that is a fact about their past loans. It is not a commitment about yours, and it is not a term. It is still worth having, in writing, because it tells you what they expect.
04Where does the return actually come from?
Lesson four gave three legitimate answers and one that is not. Ask for the specific one, for this loan.
| If the answer is | The follow-up |
|---|---|
| A risk a bank declined | Why did they decline it, and is the price right for that reason? |
| Speed or timing | What is the borrower's deadline, and what happens to them if they miss it? |
| A specialism | Whose, and what have they done with it before? |
| “The structure” or “the strategy” | Name the borrower. Then ask again. |
A good answer is specific to the loan. A rehearsed answer about the asset class is an answer to a different question.
05The sentence that does the work
Write the four questions down and take them with you. Deciding not to lend is a correct outcome, and it is the outcome these four questions produce most often.
Next: how to check the person in front of you.