If you are planning a business that does not need a lot of investment but you still do not have any money for your business, you can raise your business funds through friends and family. You can fund small business by asking with your friends and family. The best thing about this funding option is it can usually be interest free loan, meaning you can only pay back principal amount. That’s because your friends and family want you to become successful. However, relying solely on this method may not work always for securing business funds especially if you do not have a lot of friends and family and you need a lot of money.
Raising Business Funds Through Friends and Family
- Thread starter Mika
- Start date
This steps look like a safer way of getting money as most of them won't take interest except you promise them. This will remove that extra cost you will get if you use a bank or a loan company. However, this can have its bad sides too, aside from friends or family not willing to borrow you huge capital which you can actually overcome by borrowing little from so many, you can have a problem of people having hope of getting more from you in the future especially when your business booms and they may end up reminding you how they gave you some loan even if what they gave is not up to 0.001% of your capital. Loan companies or bank won't come for that but they sure come for interest so think wisely.
Raising money from your friends and family is one of the many ways you can raise money when you're starting out in business, it gives you leverage to get capital risk free, most families will be interested in loaning you money if you tell them what's in it for them.
You can decide to give them a share in the company, it will sort of motivate them to give you the required capital than just asking for free money from them.
You can decide to give them a share in the company, it will sort of motivate them to give you the required capital than just asking for free money from them.
uptrendfinancialsignal
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I know that Raising funds from friends and family can be a great way to get your business running and off from the ground. You just need to make sure that you approach the conversation with clarity and to also do it with respect. Additionally, you must be prepared to share your business plan and your inancial projections too. You must to treat your conversation with your friends or family professionally even if it's with someone you're very close to and don't forget to discuss the repayment terms.