Asking Your Family To Help Finance Your Business

In this article, we will see 3 individuals who took loans from their families to be able to start up their, well, start-ups.

Mr. X’s mother borrowed him half a million dollars; Mr. Y’s mom borrowed him $20,000 and Mr. Z’s family gave him $120,000. They each had a dream for their businesses.

You might go, “awwww” but know this: there is going to be maximum pressure on you compared to if you had taken the money from the bank.

Here is some advice on how to borrow money from your family:

1. Invest your very own money

Chances are, you have money in the bank but it is just “not enough” that is why you feel like asking your family for extra money. But no matter how little the amount might be, invest part of it first and get a head start. This shows your family that you are serious and are willing to lose all of your own finances to start your dream. They will be more inclined to give money when they see you working hard.

2. Get investors on board

Be objective. Here is what I mean:

If I was to start a business, it would be on natural hair products. The first thing I would do after creating some sample products would be to go to investors interested in my particular niche.

This is because they will be able to see something that your family won’t be in the initial stages.

Only after have you been able to get investors on board do you go and ask your family for money.

TIP: Even though it is your family, the ones who are supposed to love you the most – that is borrowing money, make sure to get forms and make it super formal. Remember, this is still business.

Because the chances of them knocking at your door some 5 months later asking for their cash back in full, is high.

Tip 2: Do not ask for too much money

This is not me being cynical but just in the case that the business does not work out, you won’t have much to pay back.

I hope this article has helped you as to how to go about getting money for your business.

Be cautious, always.