What’s the ROI on that Pound of Flesh?

Three young guns – and not a detained Nigerian prince among them – are currently offering investors a chance to invest cash now in return for a percent of future income.  One, a 26-year-old Stanford grad, has even priced it out: 6% of future income for $600,000.  Even with no hurdle rate, this would require her to average annual income of over $250,000 until she is 65 just to break even.  And you don’t even get observation rights.

But necessity is the mother of invention.  As the WSJ notes, commercial bank lending continues to fall at an epic pace, registering their biggest full-year decline in total loans outstanding in 67 years.  More than 5% of all loans are over 90 days due.  So if you are going to sell your pound of flesh, why not go direct?