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A gentlemanly handshake nearly cost his business

By Paul Kariuki | Aug 13th 2014 | 2 min read

There is a saying that friendship and business should not mix. This is what Julius should have known when he stood as a guarantor for his friend.

Julius sells DVDs and CDs along a busy Nakuru town street and rakes in a good daily income. And to prove his business acumen, he has expanded to two other stalls selling the same merchandise and employed two salespeople in the process.

He recalls that particular Friday noon when a friend of his dropped by seemingly in a tight fix. He was in need of an urgent loan to have his car released from a garage and had entered into talks with a shylock who was willing to give him a loan. The problem was, the friend needed someone to guarantee the quick loan and Julius had easily come to mind.

The shylock has a front office in a building across the road from where Julius operates from.

Julius' friend had been a loyal customer and a friend for a long time and Julius was moved by his plight. What's more, he stood to gain something once the loan was cleared.

After establishing that Julius operates a genuine business with assets worth auctioning in case of default, the loan shark spelt out his terms. The pair agreed and appended their signatures on the forms provided. Interest was set at a monthly rate of seven per cent.

The friend walked away with a Cheshire cat smile plastered across his face, giving Julius a beefy handshake for the Sh30,000 loan securely tucked in his inside coat pocket.

Before the month was over, the friend had managed to pay the loan shark Sh10,000, promising the rest with interest at the end of the stipulated period. But that was not to be!

As Julius was counting himself a valuable person for standing by his friend, the shocker came. The shylock notified him that his friend had defaulted and could not be reached on phone. A panicky Julius attempted to call him only to find a permanent mteja (unavailable) message.

A quick visit to his rental unit in a costly apartment building yielded nothing. His friend had simply cleared the room of everything electronic and taken his clothes with him, leaving behind furniture and accumulated rent arrears. His whereabouts are unknown to date.

The shylock, demanding his ‘pound of flesh’, told Julius to choose between having his property auctioned or repaying the rest of the loan with interest accrued.

Julius chose the latter, knowing he would be out of business if he was auctioned. Based on his businesses performance, he was ordered to make a daily deposit of Sh2,000 with the exception of Sundays. Defaulting on a single day would attract Sh2,100 in interest.

The struggling businessman now knows better. He is wary of any friendly handshakes. It is unlikely he will recoup his losses with the promised Sh3,000 for having acted as a guarantor. 

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