Personal loans are just that: Personal
Advantage and disadvantage rolled into one.
Here we're going to look into one of the more immediate and easier to get, though sometimes distasteful, sources of small business capital available to the budding entrepreneur: Your family and friends.
Going to family and friends for money is often a trial for many of us, and the reasons for that are clear.
You're taking a personal relationship based on love and friendship and throwing in a hefty dose of financial pressure on top of it.
It's no secret that money troubles are the number one reason for problems in marriage.
Therefore, it is no surprise here that families and friends can suffer the same types of turmoil with money issues between them.
It would seem to be the best place to turn. These people want you to succeed, and have your best interests at heart.
Only when it comes to money, this can be problematic.
Everyone has a say in how you're doing things, and will feel so much more free to express this than, say, a banker might.
Money issues can change the dynamics of relationships in a family, so we need to be careful how we tread when we approach family and close friends for money.
First of all, if you expect to be taken seriously, present to them as you might to an investor.
Too often people approach their families and friends expecting them to lend them money at no interest for a good length of time without providing any documentation or plan for its use. This is just wrong.
Asking someone, anyone, to loan you money (especially for free) without presenting them with an idea of how it will be used, some plan for paying it back, and a sense that you will be a responsible person with their money is asking too much.
You're asking them to take money that they could be employing to get a return elsewhere, and give it to you. This is in essence costing them money!
No, give them the respect they deserve and offer them a clear idea of what the money will be used for, when they will be repaid, and offer a fair rate of interest.
They may refuse the interest, but by offering it you will have demonstrated your integrity and concern for their interests.
Put it on paper as well. Make a loan agreement and stick to it. When structuring it, make sure they are terms you can abide by, and then make sure you do!
All of this cautionary language aside, family and friends can be great sources of initial seed capital to start your home business.
Just be sure to remember to keep the relationship first and foremost as the highest priority, and you'll likely be blessed with a profitable experience!
Next Page:
Savings - Using Your Own Money To Finance Your Business
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