When the Borrower Is a Friend

You wrote the check because you trusted the person.

A friend was raising for a fund. A cousin was buying a building. A college roommate had a software idea. Someone you'd known for years, someone you wanted to back, someone you couldn't say no to without feeling small. The money went out. A note was signed, or maybe not. Updates came monthly, then quarterly, then stopped.

Now it's been three years.

You haven't asked for a statement in eighteen months. You haven't pushed for the redemption you're technically owed. Last time you saw them at a dinner, neither of you brought it up. You both pretended the position didn't exist.

This is the most common stuck position we see, and almost nobody writes about it.

Why the call doesn't get made

An institutional creditor has process — default notice, move to workouts, escalate. The borrower being at your daughter's wedding means you don't. The friendship is the asset that process is designed to protect, and it's also the thing that keeps the position from moving.

So the position rots. Not because the friend is a bad person — usually they're not — but because nobody is actually accountable for the money. They don't give status because no one is asking. You don't ask because applying pressure feels like a betrayal of trust. Six months becomes two years.

The friendship gets worse anyway. You start avoiding the dinners. They feel it. The thing you were trying to protect by staying quiet is already gone.

The third-party move

Hand the position to us.

The conversation you have with your friend is short:

"Hey — sorry, I've moved all my non-core positions into a vehicle YMC manages. They handle everything now and I'm not in the loop on the file anymore. You'll hear from someone there."

That sentence is true the moment you sign the assignment. It is also one of the most useful sentences in private credit. It converts a personal awkwardness into an institutional process. Your friend isn't being chased by you — they're dealing with a fund. Funds chasing borrowers is normal. Friends chasing friends is not.

You get to keep the friendship intact, or at least intact enough to survive. We do the unpleasant work, which is what we are for.

What we actually do

We read the documents — or write them if there weren't any. We open a clean channel with the borrower, on YMC letterhead, no anger and no history. We figure out what's recoverable, on what timeline, in what form (cash, paper, equity, a slow plan). We propose terms that are firm but not punitive, because the goal is recovery, not retribution.

Most friend loans resolve more quietly than the lender expects, once the lender is out of the loop and a neutral party is in.

If the borrower can't pay, we tell you that too. Then the question becomes how to take the loss cleanly — including, if it helps, buying the position from you for a dollar so you get the tax loss and your balance sheet stops carrying it.

When to hand it over

Sooner than you think.

The right moment is when you notice you've stopped asking. Not when the position is already a year overdue and the friend has stopped returning calls — by then the recovery is harder and the relationship is already strained. The earlier you institutionalise it, the more polite the whole process stays.

If there's a position on your balance sheet that you avoid thinking about because of who's on the other side of it, that's the one. Send it over. Go back to enjoying dinners.