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Family Investors  


Eminent Member Subscriber
Joined:3 months  ago
Posts: 40
December 5, 2017 1:42 pm  

Financing your business can be quite difficult but there are some easy methods which can help you build up your capital for your business. One such method is asking family members to become investors or asking for a loan from them. I know that some people don't like this option because it can create some problems in the future and you just don't want to happen especially with loved ones. Have you ever financed your business using family members funds? Would you rather them be an investor or ask for a loan that you can then repay once you are able to?

Timothy Alexander
Member Admin
Joined:4 years  ago
Posts: 64
December 5, 2017 6:09 pm  

I have been on both sides of this. Many years ago, I asked my sister for a business loan and gave her a very good interest rate, and she was getting a much better return than if she let the money just site in savings or even invested in stocks. The terms were 24-months. Towards the end of it, I was having some cash flow issue. Long story short, it caused stress with our relationship. However, she was paid in full even though the last few payments ran about 90 days.

On the other hand, my brother had started a business and also needed a short-term loan. So, I did what was done for me. Well, he never made one payment on time and quickly stopped paying altogether. It got to the point that I was ready to sue. The only reason I didn't is my mother intervened. Another long story short, he ultimately did not feel any obligation to pay me back and we no longer speak.

My advice is to never involve friends or family in a business. It is just not worth it. 

Active Member Registered
Joined:3 months  ago
Posts: 6
December 5, 2017 10:28 pm  

My brother's bestfriend did that method. He asked my bestfriend to fund his business and since she was younger to him she felt the obligation to follow what his brother asked him to. His brother promised her that he will pay her every month with added interest. The business generates income but he never pay my bestfriend or even return the amount he borrowed. Now that my bestfriend is the one who needs help, she can't even ask his brother for it.

Its hard to try that method since it doesn't have any contract only promises made verbally.


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