Update:
LoC B has been fully funded @ $20,000 USD.
We would like to thank all the lenders who participated. Both LoC are fully funded. We have no further funding needs at this time.
Topic: [FUNDED] Tangible Cryptography LLC seeks LoC to expand working capital (Read 5432 times)
August 11, 2012, 08:33:09 PM
August 09, 2012, 03:16:19 PM
Update:
LoC A has been fully funded @ 500 BTC. I think this is an important step forward for BTC based lending. 0.5% per week = 29.6% APR. While certainly not cheap, it is significantly less than many other similar loans have funded in the past. A sign IMHO that Bitcoin lending is maturing.
LoC A has been fully funded @ 500 BTC. I think this is an important step forward for BTC based lending. 0.5% per week = 29.6% APR. While certainly not cheap, it is significantly less than many other similar loans have funded in the past. A sign IMHO that Bitcoin lending is maturing.
August 09, 2012, 10:13:54 AM
I reduced the request for LoC A to 500 BTC as it now appears likely that both lines will fund. If Loc B also funds, 500 BTC should be sufficient for our needs. 250 BTC of the 500 BTC has been funded. Lender wishes to remain anonymous.
August 08, 2012, 09:45:18 PM
Quote from: Anonymous Lender
Gotcha. So the profit potential here is 4.8K in total then if a lender lent out the full 20K.
Correct.
$20,000 * 1% per week = $200 interest accrues per week.
There is no compounding as interest-only payments are made weekly.
24 weeks @ $200 per = $4.8K.
August 08, 2012, 09:36:21 PM
Under Option B of LOC request, along with the Money in USD, would you be willing to offer 3% stake in the LLC in the form of Membership Shares? (Real Shares or Certificates)
No. No equity will be offered as part of these notes. Still +1 for asking. Feels good to have someone wanting a piece of the equity.
August 08, 2012, 09:34:19 PM
Sorry for the delay in getting back to potential lenders. My day job demanded some late hours today.
I can finance this on my personal credit card at 9.9% APR however I am looking to refinance my house in the next six months and a $20K advance probably won't help my credit score. 
If I can't secure a loan the backup plan is to wait for the refinance to be completed and then draw an advance from my personal credit card.
So this means that the LoC B is actually a 6-month long loan, at which point you would obviously refinance using your CC for the lower rate, correct? If I can't secure a loan the backup plan is to wait for the refinance to be completed and then draw an advance from my personal credit card. Most likely although the loan can be canceled by either party with 30 days notice so it may be canceled prior to that. It is also possible I may refinance later than 6 months but most likely the loan will not be longer than 6 months.
You also mentioned home equity. I would never finance a business venture with home equity. That is just poor risk management IMHO. Saving a couple % isn't worth the risk of losing your home if things go south.
This statement doesn't instill confidence... I mean, if you got the loan from a forum member, you'd have to back it personally - so what's the difference between that and getting a HELOC?HELOC is secured by your home. Indulge me a slight derail. Nobody should ever get a HELOC for anything. Period. I know in this "cradle to grave" ultra-consumerism world we like in that seems insane but the US bankruptcy code provides significant homestead protection. A protection one voluntarily tosses out the window when they opt for a HELOC. Nothing is worth that. The equity in your home is the ultimate safety net. I have every intention of honoring my bills but what happens if I end up a comma for 9 months, I have to care for a terminal child, or my wife gets cancer and we rack up $3 million in medical bills trying to fight it. In situations like that most people (myself included) would be financially destroyed. By business, my savings, and my investments will likely all be wiped out. My good credit, my name, my reputation equally destroyed. It is also possible I would lose my job/income. After a financial anhiliation which wipes out everything you spent your whole life building you might still be able to keep your house ... unless you were foolish enough to attached what would be otherwise unsecured debt to your primary residence via the HELOC.
Of course banksters don't want you thinking like that. They want you thinking like a HELOC is just a lower interest rate credit card. SIGN SIGN SIGN get your free moniez.
August 08, 2012, 07:34:28 PM
Under Option B of LOC request, along with the Money in USD, would you be willing to offer 3% stake in the LLC in the form of Membership Shares? (Real Shares or Certificates)
August 08, 2012, 04:25:07 PM
If the BTC LOC paid 1% I'd be more interested. Otherwise watching.
August 08, 2012, 04:12:53 PM
Debt, unlike equity, allows you expense Interest. You can't deduct dividends.
If you were to set up an investment vehicle(in a country with favorable tax laws) that bought your company's debt, you could expense away most of your llc's profits as interest. That interest could then pass the to the fund. The fund can then disburse these payments to you as a dividend, taxed as capital gains and not income.
If you were to set up an investment vehicle(in a country with favorable tax laws) that bought your company's debt, you could expense away most of your llc's profits as interest. That interest could then pass the to the fund. The fund can then disburse these payments to you as a dividend, taxed as capital gains and not income.
Wow. That honestly would never have occurred to me. Is your occupation in accounting or finance.
August 08, 2012, 04:10:18 PM
The purpose of us filing a 1099 would be to deduct the interest (we get the tax break, IRS can seek taxes from lender). Given the gray area surrounding Bitcoin and the limited information we will have on lenders we will not be filing a 1099 and will just lose the ability to write the interest off as a business expense.
Given the nature of our business the easiest method of interest payments would still be Bitcoins. As an example if a lender was owed $100 USD in interest that would be converted to BTC and paid to the lender. The question them becomes what rate is used for the conversion. Using the MtGox 24 hour volume weighted average at a certain day/time once a week would be a fair method.
Example:
$100 USD interest owed. Note indicates conversion to BTC is based on MtGox volume weighted average price for prior 24 hours every midnight UTC on Monday. After week 1 @ Monday 00:00:00 UTC the VWAP is $10.80 lender would be paid $100 / $10.80 = 9.259 BTC. After week 2 @ Monday 00:00:00 UTC the VWAP is $9.85 lender would be paid $100 / $9.85 = 10.152 BTC.
In discussion this with a potential lender I realized this would be a good method for dollar cost averaging if someone wanted to build up BTC holdings in a slow & safe manner. One fiat investment, periodic weekly BTC payments.
We are willing to consider other options. If the lendee would rather be paid directly in fiat, ACH or company check would be an option.
Given the nature of our business the easiest method of interest payments would still be Bitcoins. As an example if a lender was owed $100 USD in interest that would be converted to BTC and paid to the lender. The question them becomes what rate is used for the conversion. Using the MtGox 24 hour volume weighted average at a certain day/time once a week would be a fair method.
Example:
$100 USD interest owed. Note indicates conversion to BTC is based on MtGox volume weighted average price for prior 24 hours every midnight UTC on Monday. After week 1 @ Monday 00:00:00 UTC the VWAP is $10.80 lender would be paid $100 / $10.80 = 9.259 BTC. After week 2 @ Monday 00:00:00 UTC the VWAP is $9.85 lender would be paid $100 / $9.85 = 10.152 BTC.
In discussion this with a potential lender I realized this would be a good method for dollar cost averaging if someone wanted to build up BTC holdings in a slow & safe manner. One fiat investment, periodic weekly BTC payments.
We are willing to consider other options. If the lendee would rather be paid directly in fiat, ACH or company check would be an option.
August 08, 2012, 03:39:44 PM
Would Tangible Cryptography be required to submit a 1099 form for the interest? (I am not going to try to hide a $10000+ loan from the IRS, just want to know what sort of paperwork I would be dealing with.)
If interest is paid weekly, how would the payments be made? (Paying bitcoins is easy, but what about dollars?)
If interest is paid weekly, how would the payments be made? (Paying bitcoins is easy, but what about dollars?)
August 08, 2012, 03:26:26 PM
Debt, unlike equity, allows you expense Interest. You can't deduct dividends.
If you were to set up an investment vehicle(in a country with favorable tax laws) that bought your company's debt, you could expense away most of your llc's profits as interest. That interest could then pass the to the fund. The fund can then disburse these payments to you as a dividend, taxed as capital gains and not income.
If you were to set up an investment vehicle(in a country with favorable tax laws) that bought your company's debt, you could expense away most of your llc's profits as interest. That interest could then pass the to the fund. The fund can then disburse these payments to you as a dividend, taxed as capital gains and not income.
August 08, 2012, 02:37:13 PM
Debt does have 1 value over equity. 
Do you know what it is?
If I were you, I would be setting up an additional company for a later purpose....
Do you know what it is?
If I were you, I would be setting up an additional company for a later purpose....
I am not sure what you are hinting at. Care to share with the rest of the class?
August 08, 2012, 10:27:15 AM
Debt does have 1 value over equity.
Do you know what it is?
If I were you, I would be setting up an additional company for a later purpose....
Do you know what it is?
If I were you, I would be setting up an additional company for a later purpose....
August 08, 2012, 10:19:01 AM
I added some questions & answers.
August 08, 2012, 09:30:37 AM
I'd be interested in joining a syndicate for LoC A. PM me if this looks like it might go syndicated.
I am not sure what syndicated means? Do you mean funded by multiple lenders?
August 07, 2012, 06:09:17 PM
do those other two hold 50% or more of the equity in the company?
No. I retain >50% ownership of the LLC.
August 07, 2012, 06:04:26 PM
Tangible Cryptography LLC has three members however the debt will NOT be guaranteed by the other two members.
do those other two hold 50% or more of the equity in the company?
August 07, 2012, 02:27:34 PM
I'd be interested in joining a syndicate for LoC A. PM me if this looks like it might go syndicated.
August 07, 2012, 02:25:49 PM
Could you clarify why you aren't pursuing traditional capital avenues? e.g. business loan or line of credit, or if you're personally securing it, home equity loan or line of credit. In todays <5% APR world, it seems strange to pay 52% interest...
-bgc
-bgc
Just as an observation - it strike me that there are people that have obtained consumer credit rather than business credit without appreciating the difference. I have run several SME businesses, and one moderately large enterprise (circa $50M turnover). Banks (bless them) typically want more collateral than the business have. To get a loan, I would expect them to have to sign over their houses as personal guarantees. To give two examples:
a) Sought a $40k business loan to cover some timing differences in forward payments. Refused despite having a $50k deposit with the bank.
b) Sought an overdraft facility during growth phase. Debtors were increasing around $2M/month and the business was at break-even with strong cash-flow. Refused despite obtaining a $5M guarantee from a major shareholder.
Why do people pay more - because they have few options. That is why returns are expected to be between 30% and 50% per year. (btw, the business above managed that for its investors turning $10M into $40M+ in around four years)
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