[kotor]

Let's say I am going to seek out a small investment of $200 for a website I'm working on. What would be the standard length of time for payment on this investment? Do you normally make payments like any other loan. like $20 a month? or $50 a month?

[jdoc]

If this is a person-to-person loan the payment schedule (and interest rate) is whatever you negotiate. I suggest going to www.prosper.com and seeing what interest you get from there.

[akula]

Originally Posted by kotor

Let's say I am going to seek out a small investment of $200 for a website I'm working on. What would be the standard length of time for payment on this investment? Do you normally make payments like any other loan. like $20 a month? or $50 a month?

Ok....so I am not sure exactly what you are asking....but from a purely maths point of view:

On $200 a loan, with;

i = 30% p.a (compounded every six months)
n = 2

PV = PMT[1-(1+i)^-n]]/i

therefore;

200= PMT[1-(1+.15)^-2]/.15

PMT= $123.02

so if you borrow, $200, at 30% p.a., compounded every six months; to repay the full amount - you will need to pay back $123.02 after the first 6 months, and then another $123.02 at the end of the year.

I don't understand, what are you asking?

[GriZzly]

The real question should be...how long do you need to spend searching under your couch before you can find $200. Perhaps you are using 200 as an example or you expect to receive multiple investments of 200 from various individuals. Otherwise I don't see a problem. I can only imagine a friend or family member would invest such a small amount because the return wouldn't be worthwhile...in which case I am sure they will be in no rush to see their money back if they are doing this as a favour.

[Day2]

What you're talking about is a loan, not an investment.

Terms can be whatever the two parties agree to.

The trick is picking terms that will not make your life financially difficult. So, if you're borrowing $200 for a business that grosses $30 a month, you need to make sure you're payments are less than $30 a month (otherwise you'll outstrip your profits and not be able to pay for your loan). It's good to be conservative here and have backup money somewhere. A ton of businesses can grow themselves right out of business if they guess incorrectly.

As an example, I sold shares in the web application development firm that I founded. The note is scheduled to be paid off in 4 years time (monthly payments for 48 months). 2 years is also pretty common (for company buyouts). Longer terms tend to represent more risk for the person lending the money (unless the business has significent tangible assets that can be seized if the borrower defaults on the loan).

Of course, I'm not mentioning interest, as there are plenty of interest calculators on the web.