If you’re considering approaching someone you know for a loan to help fund your business, the tips below can help you navigate the process.
Before You Ask
Treat your friends and family as you would any other investors. Be prepared to answer your potential lender’s questions and share a visual representation of your idea whether it’s via slides, graphs, or schematics that demonstrate your plans and seriousness about getting started.
Know the following before you ask:
- How much you’re asking for
- Why you’re asking for it
- How you’re planning on spending the money
- How and when you will pay it back
- Any consequences for late payment
Protect Your Relationship
Perhaps the greatest concern of entering into a borrower-lender relationship with a loved one is the fear of ruining your relationship. By seeking legal help and having a written agreement, you can reduce the chances of misunderstanding.
For more information on asking friends and family for funding, please see How to Ask Friends and Family to Fund Your Business.