business loan...scam??

[jelly baby]

A businessman friend of my son, has asked him and others each to lend him amounts of £3000 - £5000 as short term loans. He says he will pay it back within 6 months with at least 15% possibly 20%interest. We have advised him not to do this, and pointed out that as a businessman he should be able to go to the bank and borrow at a more favourable interest rate, and if the bank won't lend then he may have a money problem. We have heard of similar things before and the borrower does a runner. Has anyone else heard of any scams of this sort?
Thanks

[sara3]

it doesn't sound like a notorious scam, but it does sound iffy for the reasons you have already said. I think you're right to be wary.

[Androcles]

Sara is right - any business borrowing on that basis is either dodgy or daft. Not security for the loan - asking several people? Don't touch it with a barge pole!

[buildersmate]

Just don't do it. The chance of being repaid the capital on an unsecured loan of this type is next-to-none, let alone any interest. Doesn't sound like a friend to me, more of a chancer.

[another-view]

Thsi is one of the oldest tricks in the book. Don't you remember Bernie Maydoff last year doing the same thing? He was jailed for 150 years if I remember right. Google ponzi scheme

http://en.wikipedia.org/wiki/Ponzi_scheme

[jelly baby]

Thanks for your answers
jb