Would you “invest” in a bakery in these circumstances

[MusingMouser]

I live abroad in a developing country and work online for a UK company which means I am financially better off than most people around me. I don’t speak the local language very well. Since I arrived here I have made a few friends from English speaking countries and I spend time with non-English speaking friendship group. One of my American friends introduced me to his favourite bakery when I first arrived and I really like it now too. The baker is part of the friendship group I spend time with. I have been a customer at the bakery for about 6 months and I get on pretty well with the baker. We don’t talk a great deal due to the language barrier, but we have met socially several times and he makes an effort to include me even when we cannot talk. I am Jewish and this bakery is also the only place in town to buy challah (the bread that Jews eat on our sabbath).

We recently had a natural disaster in our town and the bakery was damaged. Most shops have opened again now but the bakery is still closed. I have heard (not from the baker) that it is going to cost about £3000 to repair the bakery and that he is trying to borrow money from friends and family, but if he can’t, he will close the bakery. I could afford to lend him £3000. I wouldn’t want to lose that much money, but I could afford to without it ruining my life plans. In my situation, would you reach out to the baker to find out more about the situation and potentially offer to loan him the money to reopen the bakery? If so, what conditions etc would you want in
place? I’ve only ever lent money to my sister before so I don’t feel like I know what I’m doing, but I’d like to help and I don’t want to see the bakery closed.

Are you looking at a loan or an investment?

I have not spoken to the baker about this at all, so honestly I don’t know if he would be interested in either. But from what I have heard, if I were to approach him I think it would be to offer a loan.

You could to lose it- not due to any shadiness on his part, but due to life precariousness.
It’d be a great thing to do. Do you have a mutual friend who could ensure everything is crystal clear?

Sounds like more of a loan than an investment. I’ve learnt that you only loan money if you are prepared to loose it. The baker hasn’t been able to build any reserves whilst running his business to cover unexpected events like this, so not sure if he can give you the money back once he’s up and running again. Under your circumstances I’d only consider loaning a portion of it, couldn’t you and your friendship group club together to help your friend back on his feet? Good luck

Personally I would offer some money, but not all. Do your own loan agreement where it states how much the loan is for and how much you want each month to be repaid. Then you both sign it.

I lent some money to a relative thinking they would repay me back before long, but it was never mentioned, despite them taking holidays, home improvements etc, They did pay it back about 5 years later when I’d virtually written it off.

Although you say it's a developing country, wouldn't he be likely to have insurance that should cover this kind of thing? Or does no small business where you are have it? If others do usually have it, why didn't he?