The best way is to give loans to those people to whom you personally know as if you give loans to those people who you do not know or those people will live far away from you then at default it will be hard for you to get that amount from them.
well that's incase if the one who requesting loan doesn't provide any collateral,if the one who request loan could provide a collateral atleast worth 130% or even more,it'll be fine if it comes to defaulted loan,just sell the collateral,but still selling a collateral isn't that easy as i speak
just dont take a risk if you're not ready
130% is not even enough, you should ask a collateral bigger than that so he will be force to pay his loan. It is not that we are interested of the collateral but we just want to ensure that the borrower will think of his debt to us. We are in the business of money so liquidity is our first concern.