Local struggles with loans

There is one negative about the lenders on VI. Some of the lenders know that the local community cannot survive without loans in some seasons of the year, so they have been intentionally increasing the interest rates of loans out of season, while increasing the overall length allowing them years to profit off those who may need the support.

The real worry about this practice isn’t the initial loan, or even the loan itself. It’s that they want the amount back over the space of 5 years. Most of the community would apply for a business loan that they want to pay off in the summer, because there is a real possibility that by the same time next year they will need to reapply.

When you start adding 5-year repayment lengths, you start trapping these customers into paying off loans and needing to take out additional loans while still paying the previous loans off. This staggers their debts horribly, and by year 5 it begins a cycle that means everyone has at least 5 loans looming over their heads at any one time.

Because most of these loans are secured against their homes or businesses, there is a real risk these people become homeless and the lenders start taking their properties to sell to those who do not live in the Island. We have been discussing this issue for several months now, and it looks like it will only get worse.

While we are vehemently against this practice, the truth is the other lenders continue to take advantage of it. They won’t stop, and the ones who haven’t done it yet are going to start. They know that the other lenders will not put an end to this practice, and it will cause a landslide of terrible loan practices across the island. It will become an issue, and it needs to be stopped before it gets any worse than it already is.

Lenders and corporations

The VI has an influx of large corporations looking to set their headquarters on the island for tax reasons, which we have covered before. But what we haven’t covered yet are the amount of small businesses that operate on VI. There are so many small businesses that do different things usually catered towards the tourism industry, and one of my favourites that we have invested in was a scuba diving school.

The scuba diving school was great. They had instructors from around the world who have been deep sea diving for years, have qualifications from around the world and have taught in so many locations over the years that it makes me envious.

Some of them are also ex-marines and have survived through wars. So immediately we were interested in investing into them because we knew that the people themselves were good. What really knocked us out of the park was the quality of the school itself.

This was before they purchased a property, and they took a few of us out into the ocean for a day to teach us how to scuba dive. We couldn’t believe that it would be that fast to learn how to scuba dive since it is such a difficult skill, but that’s where all credit goes directly to the instructors. They were amazing at teaching us how everything works.

We spent the day scuba diving around the island, and I was able to see parts of the VI and the ocean I have never seen before. What was the most impressive aspect is how great the teachers were as people. They were some of the nicest and understanding people that we have met on the island.

We immediately invested into the company, and we still help to finance them whenever they are in need.

Lending for tourists

Another great thing about the VI is the number of tourists that come in each year, and with that the amount of tourism-focused businesses. Because there are so many tourists coming in every year to the islands, we have many budding business owners looking to take advantage by providing a product or a service that the tourists will want or need.

One of the biggest tourist stores in the VI had been financed by us through a loan. Business loans are the biggest sources of finance for companies, and once they had enough money, they created what was a chain of supermarkets around the island. What we loved about it and made us want to invest was that they operated in the most populace parts of the island, but where stores don’t operate.

As strange as that may sound, it does make sense. If there is a high foothold of traffic but little to no stores around for a tourist to buy a bottle of water, sun cream or other essentials, then they would be willing to pay more. If you are on a hot island and you don’t know if you will see a store for another hour or two, then you would be more willing to part with £5 for a bottle of water, whereas if you were in England you wouldn’t.

While some believe that this is taking advantage of the tourists that visit the islands, the truth is that the people who do come to VI on vacation are generally part of the superiorly wealthy. They are travellers who are either investing in businesses or using the offshore banking system the island provides.

The store owner was very smart to plan out his chain in places with high traffic and low supply. We knew immediately it was a winning investment.

Freedom of lending!

The great thing about being a lender in the Virgin Islands is that you can lend to companies and customers based anywhere in the world. There is a free reign over trade in the islands as with some regulations it can act as its own entity. That gives us a lot of freedom over who we work with and how we work, but that also means we must go above and beyond with due diligence.

We are slowly aiming to increase our foothold around the world, and especially within the western world were the profit margins are much higher than the less developed nations. That isn’t to say that focusing on developing nations is not a smart idea, because often they are the most willing to lend a large amount of money.

For us, the larger amount that we can lend customers, the more we are liable to make back from interest. The large spike in interest is what we are looking for, as that is where the profit comes from on our side. Since western countries often have the highest lending rates and highest lending amounts, it makes sense to focus on those areas to try and grow our business.

We do appreciate and wish to take advantage of the regulations that the islands currently have in place. While it is a tax haven, some of us plan to turn it into a money-making area for other reasons.

The benefit of loans from VI is in the name. Strangely, due to the success the company Virgin has had, the name Virgin Islands Loans has taken a bit of respectability and credibility throughout the world that we were originally unaware of. This benefit also means we must be careful and differentiate ourselves from the large company unless we run the risk of a lawsuit.

Virgin Islands Loans

The Virgin Islands is a great place for loan companies to thrive due to the nature of business around the islands. So many companies base their headquarters around the VI because of the tax haven that it has become. To do this, many companies must pay a sum to the VI banks, and they do it through us a lot of the time.

Many companies take out loans in the VI because they need a source of revenue from the islands to be considered a VI business. So, they take a loan with heavy interest, and pay it off over several years while registering themselves as a business on the islands. This means if you are a lender on the island, you have a constant stream of income.

The islands tax haven was only recently mainstream news for the last 10 years, but people have been doing it for a long time. We actually started our business back in the 1960’s, and as there are always companies planting their headquarters on the island, we always have new customers on top of the older companies that are continuing to pay off their loans to this day.

The best thin to happen to the VI were the influx of headquarters from companies around the world. It was not the easiest place to live in due to the lack of trade. There isn’t much that can be planted into the soil, and there are not a lot of rich natural resources in the island either. So, the general trade around the islands were low.

Once large corporations began to plant their HQ’s around the island, many medium sized companies but still global began to do the same. The first of those to begin offering loans are the ones who made the most money, but even for smaller companies like ours there is still opportunity for very little work.