Friends & family are a popular way to borrow funds to start or grow a business, but there are some issues.  Even though these people are close it’s best to treat the transaction professionally.  All too often, borrowing from friends and family is treated casually and with that leads to resentment and a possible loss of friendships.

A few things to focus on when borrowing from friends and family

  • Prepare a business plan like you would for a bank to show you are committed to making this business work.
  • Make sure enough money is borrowed as going back will cause concern
  • Have an agreement detailing how and when the money will be paid back
  • Also, what happens if the business fails and you have no income? Be up front about the risks on lending to a business


Nobody ever plans to have a business fail, but even if business goes as planned, but mixing friends, family and money are great opportunities for hurt relationships, making it very important have everything written out.