Before we get into the logistics of this type of transaction, you should know that anyone that is capable of asking someone to get a loan for them in exchange for paying them a fee is perfectly capable of asking someone to invest in their company.

The next thought is that you will stand a much greater chance to get someone to invest in your company than you will to get someone to get you a loan in exchange for you paying them a fee. If the person borrowing the money informs the loan officer, obtaining the loan will become even more difficult because banks are highly suspicious of this type of transaction. They will most likely require that the loan be even more collateralized than normal, as the risk of failure has just gone up.

After having been party to a similar transaction, although mine was for stock and was from a person that was easily able to collateralize, I still would not recommend accepting the money.

Investors hate to lose money and it only adds more salt in the wound when they have borrowed the money and are stuck with paying it back. It's the kind of thing that often destroys friendships.

If you're determined to do this type of transaction, you should never do it for more money than you are capable of paying back through alternate sources of income if the transaction fails. You should be the person that bears the responsibility of payback and not the person that secured the note. That means, you just shouldn't do this transaction, I speak from experience.

There's a good chance that my friend who I'm speaking of will read this and agree with what I've shared with you. It's just not worth getting the money. The relationship is not worth putting at risk.