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.
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.
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
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
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
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
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.