Private Lending rules

[Danielle Cage]

I live in Illinois and am looking to purchase, fix and flip properties. My brother, who lives on the West Coast, has become friendly with one of his neighbors and in passing mentioned my business. The neighbor proceeded to tell him that he has a chunk of cash sitting around not performing for him and would be interested in lending it out for deals.

I am very uncertain as to any rules/ regulations regarding private lending. I've done some searches here on BP, however am not finding anything mentioning this.

Does anyone have experience with this type of a situation? I'm fine with negotiating something that would be palatable for all parties involved. I just want to make sure that I follow any necessary rules.

Thanks!!