The Right Way to Ask Family for Start Up Capital
You've got a great idea, a solid business plan, and lots of enthusiasm. The only thing missing is the money to get started.
If traditional funding sources aren't a viable option, you may want to consider asking a family member for a loan to help you with your start-up costs. Here are a few suggestions for keeping the transaction "professional."
Have a Business Plan
Make sure you've put some effort into drawing up a detailed business plan. By reviewing your plan, the potential lender can make an informed decision about lending you the money. It also gives the lender an opportunity to bring up any concerns and ask constructive questions that may help you fine-tune your plan.
Don't Just Shake on It
You can minimize conflict by putting your loan agreement in writing. Settle on an interest rate, and come up with a repayment schedule that you both agree on. Make the arrangement conform to standard business practices regarding late payments and fees. Following the rules of the loan agreement will separate it from your personal relationship with the lender.
Be certain that both you and the lender are clear about the role your relative will play in your business. If the lender has expertise that you would welcome, discuss parameters from the get-go.
Take charge of your financial future. Give us a call, today, to find out how we can assist you and your business.