hello I’m Gary Shotton and I’m here as a part of Inspiring Better Business many people have talked with us by phone on developing nations and a common question and problem that comes up is not money or capital to get started and the next thing that follows from that is can I get a loan and I’m going to talk today about an unsecured loan so that we can separate the ideas of just any old loan into two major categories one a secured loan and the others an unsecured loan and I hope to give some light and shed some understanding on the difference of the two and maybe help people well first of all as implied here we just say the word alone and we lump everything into one big group and it’s not that there are two distinct groups and to start out let’s talk about a secured loan in the United States and in the developing nations and in the larger cities in the developing nations there’s a banks and these banks work on what’s primarily considered secured loans what do I mean well when you ask for monies and they fill out an application they’re going to ask a significant amount of questions they probably will not give the loan unless it’s for a particular purchase of an asset like land or building or our piece of equipment I have a lot of loans on a piece of equipment or you could say a car loan so they’re going to require that this asset be secured against the loan this means that if the loan fails or you don’t pay the payment that piece of property the car the equipment the building the land now becomes the owner B reverts back to the person that owned or offered the loan so it’s secured with some kind of an asset an unsecured loan is when you just trust the person and you believe that person’s going to pay you back but there’s no guarantee in the sense of a sellable house set so when many times in a foreign country there someone says well will you give me a loan they’re going to not be able to put up much of a security or secured so it’s an unsecured loan in the United States credit cards are by and large unsecured loans now here’s the difference in the interest rates on a credit card you could be eighteen or twenty percent interest because it’s risky on a secured loan in the United States that might be between five and seven percent so don’t think that you can compare the two because they’re distinctly different now when you’re loaning money in a developing nation or you’re borrowing money in a developing nation I strongly encourage you to lean towards the secured loan arrangement and not be in secured in your loan now there’s times that I have been asked to help out I have followed a biblical example that I don’t cosign for other peoples loans on a typical basis but I also would even personally consider loaning a small amount of money to someone I had a lot of confidence in but I would never loan that money without the realization that I may have to what I call kiss that money goodbye and never see it again and I need to be mature enough to say also that would not alter my personal relationship with that person because I don’t want to have a best friend they borrow some money from me they can’t pay me back now our relationship is marred and even if I am mature enough and say hey I’m just going to forget that it’s all yours I gift you are guaranteed that person’s probably going to feel a little bad about that there is we’re going to family members mothers grandparents brothers sisters that’s risky because if you get an unsecured loan at a any interest rate and you cannot pay it back then the individuals relationship that you have is very difficult I’ll just put it blunt Christmastime is not going to be fun you’re not going to want to be in the same room with a person that you couldn’t pay them back on their loan and you’re now going to be your relationship is going to be marred so this is very important that you understand the difference between a secured and unsecured loan now we’re working with groups and developing nations and we’re strongly encouraging that they join into what’s called a community savings bank or community savings group and in doing that now you’re creating some much-needed structure first of all everyone’s loaning money are putting money into savings that’s a good habit start saving a little bit even if it’s a dollar a week it will build up and then the references I understand instead of a national record of Europe a history like your credit history the group knows that if they bring somebody into the group someone as I understand is willing to vouch for them to say this is a person we can trust and then over time they can borrow sums of money from the group and it’s interesting that they call that hot money that’s their term internally because that’s within the group and the people borrowing that money sense of amongst a committee a group maybe 10 15 20 people that their group that’s in their community most people don’t want to use that as a chance to be disrespected for 20 people ten people they want to keep that avenue of financing opening because it’s all both available in some way for disasters or situations that unexpected that normally insurance would help in and you could borrow some money to get out of a jam and it’s also available to borrow small amounts of money to advance your business so those people that are in that community that are for a long term in that community don’t want to in essence lose that option for the rest of their period of time whatever it may be until somebody trusts them again so it’s amazing how this community savings group has lowered and has created a good scenarios for people to do good banking saving borrowing paying it back and I and I believe that you’re creating good habits when you do that it’s very important to do that now we’ve been asked at times as Americans whether we should put money into a community savings group and my understanding is that’s very risky because many people in developing nations are so accustomed to foreign developing nations people putting money into their hands or into their system and the prevailing thought is the Americans don’t really need this money back so I don’t need to really pay it back and there’s absolutely no way for it to get paid back or to be insured it’s the payback so frankly I don’t do that now down the line I may consider following banking procedures and now with someone has been committed to a community savings group for a couple years and that the group will vouch for that and that they will vouch that that’s a trusted trusted person and that person is not starting because I wouldn’t pay them loan money for a start up no way I might give a little bit of money to just seed money to help somebody but not loan not anything I want to just let it go by by and then as that person has grown to a point this could be a purchase of a piece of equipment or a piece of property or something that advances an already existing business now I might be interested and I will be very more interested because when we follow a general banking procedures if I loan the money I’m going to have tied up some way to the best of my ability to create a secured loan that loan is following banking procedures it’s not a statement of integrity of the borrower it’s a statement of following standard banking procedures so I hope this is helpful it’s a bit of a summary and I hope you understand there’s clearly a difference loans are loans you can buy it borrow it for for a lot of things but if you don’t if you’re not careful you’ll be very disappointed maybe somebody didn’t loan you the money or you weren’t able to pay the money back you’ve got to be willing to risk something in order to get a loan that’s more than just a little bit of startup money you’ve got to be able to risk the the another half set beside the equipment or something to convince the lender that you’re trustworthy to pay that back thanks for being a part of Inspiring Better Business