Originally posted on 08/18/2013:

It really depends on how you define "profitable"...in the conventional sense, no SBR loan is profitable (they don't generate enough benefit in terms of real goods or services to be worth the time spent tracking them let alone the inflation, risk of stiffing, etc).

The weekly interest I charge balances out inflation and time-based consideration for slower repayment, with my reduced weekly interest balanced against the quicker return of points to me. Given recent inflation it's obviously not as beneficial.

With the weekly interest, the loans that have been completed so far since I started lending (about 9 months ago) I show the same amount of "profit" on loans above and below 500 points. Because of the way loans are usually set up (flat percentage up front plus weekly), smaller loans show a higher profit per unit time, but only because they're paid off faster. Larger loans "profit" less per unit of time (about half as much based on my records), but the advantage is that more points are earning interest under one transaction and not as much effort is required to track them. As an example, if you have $3,000 you want earning interest, is it better to invest all $3,000 in a bank yielding 5%, or just $500 in an account earning 10%?

There's no magic threshold above which it doesn't make sense to give out a loan, but in general, the higher the loan the less the profit. The "fixed income" of SBR pros (the daily 12 pts) combines with the borrower's dedication, ability to generate points in poker and most importantly their reputation to determine the amount they can be expected to repay. I currently have 28 loans out with approx. 77k points lent; if they were all 500 points or smaller, I'd have at least 5 times as much work to potentially earn twice as fast...not a good tradeoff since I value my time more than the "profit".

As DS said, most of us aren't motivated by profit, so the above doesn't really influence our decision making process...the few that get into lending hoping to profit quickly realize there's none to be had and stop lending.