Loans between friends and family without the awkwardness

Loans between friends and family without the awkwardness

A startup wants to solve the problem of awkward lending between friends and family.

Has a friend or family member ever asked you for money?

Have you ever needed a quick loan from one of your friends but felt awkward asking?

LendingTree estimates that 71% of individuals have felt guilty when considering asking for a loan from friends or family.

A Y-Combinator-funded startup, Pigeon Loans, might have a solution for the common problem.

How does it work?

If you're considering lending money to a friend or family member, the first step Pigeon Loans suggests is having the conversation. Make it clear that you're willing to help, but that it will be a legally binding agreement between the two of you.

They will also need to understand that the loan will charge interest. Pigeon Loans sources the fact that loans that do not charge interest create tax implications for lenders that could end up with a 40% gift tax.

After you have the conversation, you can initiate a loan for free.

Pigeon Loans will send automatic payment reminders to the borrower and allow the lender to track all of the payments that have been made.

Here's an example loan and what the lender would get paid:

Although charging interest on a loan to a loved one seems a bit crass, it benefits both parties.

Why is it interesting?

A primary reason people borrow money is to start a business.

A platform that provides a way to borrow money without the need for awkward text message reminders for payment could be a great solution for some people.

Pigeon Loans not only provides that non-awkward channel for lending money between loved ones, but also serves as an educational tool.

On their website, there are guides and tips to help people through the financial and legal components of lending/borrowing money.

You can read through the guide here.


As mentioned above, I love the idea, but only if it's used for the right reasons.

I'd like to see some Do's and Do Not's as part of Pigeon Loan's guidance content.

For instance, don't lend money to loved ones with a spending problem; another common reason family members loan money out.

What are your thoughts on Pigeon Loans?



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Written by

Derek Koza

Derek Koza

Chicago, IL
Ex-CIA | MBA Candidate @ NYU Stern | Coffee addict with a dog named Maxx