Summary:- What to do when borrowing money from relatives and friends


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private loans, friends and family.

Before approaching anyone for a business loan, it is essential to make up a business plan in a format that can be easily read by the prospective source of funds.
It is important for the main facts to be brief but complete and supported by further documentation if required.
A business plan that resembles a short novel is not the way to attract backers.

Often these are the very first source of funds. The first of many.

A crucial step that answers the first question of following investors 'How much is invested already and for what share of the company?'

However close the friend or relative, always put the loan on a solid business foundation and consult the advice of a lawyer. One never knows what the future may bring.

Spell out the terms for repayment of the loan no matter how generous they may be at the time.

Family or community loans have, in the past, been the seed capital of financial empires.


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