I would imagine that loans would work the same way in a low-tech decentralized society as they would in a high-tech decentralized society: since we would be our own banks, we would have the freedom to be creative with how we ensured that the loan would be paid.

For someone with a reputation as good as sterling silver-- 0.925 purity-- a handshake may be enough.

For someone with a good reputation, normal methods would apply.

For someone with a worse reputation, additional safeguards would be required such as a percentage of future profits or sales for a limited time (like the Sir Alec Guinness Deal), or additional collateral, or even narrowly-focused servitude such as community service. These and other requirements would be ways for someone starting out or starting over to build or rebuild a reputation. These would be the low-tech versions of smart contracts.

As our own banks, we would find ways to make loans a win-win situation for everyone involved. As lenders, we would want compensation for the capital we loan out. As borrowers (which we would be for other lenders), we would want to find ways to fulill our part of the deal without having guns pointed at our heads.

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