Lend Directly to Businesses and Individuals
Finance companies make an excellent return on their investments, and your CamaPlan account can too – by lending money to or buying the existing debt of a person or business.
With a CamaPlan account, you choose and qualify the borrower, decide on a loan/note amount and collateral requirements, assess the value of an existing note, and negotiate the best interest rate and payment terms for your benefit. Use due diligence and require security from your borrower to protect your investment, or consider a higher-risk unsecured loan, perhaps with higher interest, if you deem the borrower reliable.
You make the choices, and your CamaPlan account earns returns. We review and administer all loan documents and apply payments received to your account. If you choose to secure the note by requiring collateral from the borrower, we take possession of that collateral.
Secured Notes
A note is only secure when all loan documents have been executed and collateral of equal or greater value than the loan amount has been physically transferred to our possession. As administrator of your account, CamaPlan must approve and sign the loan documents; you cannot personally commit to lending account funds.
At this time, CamaPlan does not have the capacity to accept non-paper physical assets, such as a vehicle or gold bullion, as collateral for a loan. Instead, provide a security document, such as a deed of trust, quick claim deed, vehicle title, or stock certificates endorsed to or titled in our legal name for your benefit (below). Notes with security agreements or only references to items of security can be executed, but will be held as unsecured notes only.
Unsecured Notes
Your account can lend money without the security of collateral as you choose. While unsecured loans are simpler to execute, they also entail higher risk. You may choose to increase the loan’s interest rate, expedite the frequency of payments, or shorten the term to offset the additional risk; however, while the decision to lend without security is yours, the cost of all attendant risks are borne by the account. CamaPlan recommends and encourages accountholders to perform sufficient due diligence prior to making any loan decision.
Existing Notes
A third option is to purchase existing debt, either secure or unsecure. While your ability to alter the terms of the note is limited, you can still account for risk identified from your due diligence by discounting the principle amount paid to the current debtholder, having him or her co-sign for the debt, or similar appeasements.
Prohibited Transactions
The IRS does not specify the type of loans that can be made by tax-advantaged savings accounts; it only specifies investments you cannot make. Refer to IRS rules and regulations for complete information on prohibited transactions, including its definition of disqualified persons (ex., spouse, children, parents, a fiduciary, etc.). The structure and form of your loan agreement can also vary depending on the type of CamaPlan account you open (see Plan Types). Here are general limitations regarding loan agreements by your CamaPlan account:
- It may not lend to you or any disqualified person.
- Payments must be in the name of the account and sent to our office address (below).
- As accountholder, you cannot cash the note payments. Any payments received should be promptly forwarded to our address.
- It is your duty to request, track, and enforce loan payments, including any legal action that must be undertaken in the event of default.
Administrative Services Provided
CamaPlan guides you and the borrower through the loan process with instructions and a list of the required documents; however, you are responsible for having the documents drafted and delivered to the borrower for execution. Our account administrators review loan documents considering only their form and general content; we do not certify their legality, accuracy, or truthfulness. After the loan is finalized, we file the required IRS Forms 5498 and 1099 as appropriate, and we receive and deposit loan payments to your account.
CamaPlan does not provide investment advice, and we do not sell or endorse investment products. We do not service the loan by billing the borrower or by acknowledging and tracking payments received, and we do not pursue delinquent payments or institute legal action to enforce payment. All of these tasks are your responsibility as accountholder and lender.
