Money for Small Business | Using Relatives for Funding Small Business

Using Relatives for Funding Small Business

       Thanksgiving dinner from my perspective at the end of the table.
        Sometimes the answer to your money needs for your small business is sitting across the table from you at the holidays. Yes, the dreaded relatives. You should probably reserve this method of capital for a last resort unless you are an extremely moral person. In that, I mean are you prepared to keep making payments to your relative for years even if the business fails? Money matters between family members can cause a lot of problems and even drive permanent wedges between you.

          Some family members yearn to be a part of a business, even if it means contributing capital to fund your small business and not have any other contributing effort. Their dreams of being an entrepreneur ride with the successes of your small business. They are happy to cheer you on from the sidelines.
          On the other hand, you may have some relatives that are experts on everything. You may not want to borrow money from these relatives. They will be calling you constantly wanting updates and giving you advice on running your small business.

          If you choose this this method of funding your small business, treat the process as formally as possible. Even if your relative insists that they trust you to make the payments, create a binding note. It can be as simple as writing out the loan amount, length, payment, and interest rate, and signing by both parties. This will create an air of trust between you and the relative and give them confidence in your motives.

 

 

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