The early "Lao Gao" mostly used the self-owned funds of friends and family. Later, with the gradual tightening of the government's monetary policy, many small and medium-sized enterprises found it difficult to borrow money from banks, and the demand for private lending was increasing. Lao Gao's own funds can no longer meet the growing demand for funds, so he began to use fixed assets as collateral, use personal connections and other means to cash out from banks, guarantee companies and even pawn shops, and then pay interest.
For example, Zheng, the "Laogao" in Ruian, Wenzhou, owed 30 million yuan and was jailed, which is the representative of "Laogao". According to the police investigating the case, the interest of the funds borrowed by Zheng is basically at the monthly interest rate of 1.5 to 5 points, with an average of 3 points (the monthly interest rate of 3 points is converted into an annual interest rate of 36%, that is, borrowing 100 yuan, and the interest needs to be repaid in 36 yuan. )。 Among them, the interest of relatives and friends is relatively low, the basic monthly interest rate 1.5 to 2.5 points, while the monthly interest rate of friends who send money to their families is above 3 points. The monthly interest rate of the funds lent by Zheng is 5 to 6 cents (annual interest rate is 60%~72%).