I Know About Renting Sites Already... Anyone "FINANCING" Websites?

Yeah, I did... It kind of confused me though. He mentioned that there is a state limit but not really a federal limit. I'm limited by what I can do in the state, but not limited federally but since I'm not a federal institution I have to stay within the state limits which I think is 15%.

I hate to be someone to throw cold water all over you, but personally I think what you are doing is dangerous.

And here's why.

By making it a "loan", you have a lot more to deal with than just usury laws. But also, you have just put yourself into multiple government agencies' jurisdictions. And some of those jurisdictions have some really strange things that they can come after you for. And some of the penalties of those strange things they might come after you for don't just include fines, but a residence at a gray bar hotel . . . called Club Fed.

The trouble with becoming a banker (by providing financing, that's what you are doing) is that if it ever comes down to having to go to court, you are considered the "expert" in the eyes of the judge. And the business owner you are up against is looked at like "little Grandma from Pasadena" who is up against "the big bad bankers".

We have all seen it over the last 3 or 4 years, what can happen when a person in a position of power such as a judge or a sheriff thinks a banker is going to get one over on J. Q. Everyman. Suddenly they start "forgetting about" certain laws on the books that you might have been counting on as the basis for your legal position. There was one lady who was about to lose her house, and when the sheriff showed up, he decided right there on the spot that he wasn't going to kick the little ole lady out of her house because of some banker. Even though she'd gotten the loan, signed the paperwork, and then probably hadn't made a payment in years yet most likely spent the money. Was the bank right or wrong? Who knows? Was the sheriff right or wrong? Probably wrong, but his morals wouldn't let him follow the law. My point with this is, you are putting yourself in the position of the big ugly banker with the deep pockets instead of the J. Q. Everyman you SHOULD be considered as, the worker bee who has done work for a man who now no longer wants to pay you yet wants to reap the benefit and reward (unjustly) of your work.

Now, having said that, you need not just any lawyer but someone who specializes in knowing the laws that the bankers use. And those laws vary wildly from state to state in some cases. Even Microsoft ran afoul of the usury laws in California some years back. And the only thing they did wrong was to use the word "loan" in their paperwork. And their lawyers did not know they'd done anything wrong until many months later, when they realized that, whoops, that piece of paper they'd had all those people sign was perfectly enforceable . . . in all 49 states BUT California.

Things such as "corporate headquarters" and "jurisdiction" and "terms" all take on a life of their own when you include the word "loan" in your paperwork.

But don't freak out. There is more than one way to go about it. One way is called factoring. You could charge a bit more, then sell the contract off to a factoring company and receive payment up front and be out of there. The factoring company would then receive the payments and deal with the laws as well. They are experts and know the intricate details of the laws in question intimately, like the back of their hands. And it would be a good thing to meet with the factoring company (or anyone else you might decide to sell the paperwork and right of collection off to) to let them tell you what they need to have inside the contract before you start off. Because what they can pay you (as in how big a percentage you can sell your paper for) hinges on how tight and right your paperwork is.

And no, I don't own a factoring company, or have anything for sale to help you out.

I am just trying to let you know that there is a lot more involved in this than "let the collections agency deal with it". And that it can get ugly real fast if you are not careful.

The guys at the Indian reservation have a unique thing going on. American Indians are exempt from many laws pertaining to usury when doing business with their headquarters inside the reservation. I think it's something they negotiated when they were negotiating about their casino laws and rights.

I will say this, though. There is a reason why most people who have credit cards in their wallets usually end up sending their payments off to only one or two states every time they make a payment. It's because the bankers shopped for jurisdiction, and then when they found the favorable exemptions they were looking for, almost all of them relocated their payment servicing divisions to those one or two states that gave them the edge. But it can sometimes cost a whole lot of money to shop for jurisdiction if you want to get it right.

You personally may never have a problem blow up in your face like what I mentioned above. But then again, I think the risk is not justified by the reward in this case. Not saying your services are not worth every penny you might receive; on the contrary. I personally think you would be better off to seek a higher payment for your services than to consider wading in to the financing arena unprepared. Because like you said, it sucks when the finance term is up and you have the incoming payment drop.

So why even go there?

I thought he was.

Question... have you ever asked for those numbers?