Family and Friends Financing
Friends & Family - Asking friends and family for money is also a route to take when starting your business. If the business fails, you run the risk of damaging these personal relationships. If you do decide to involve family and friends in your business, you can either ask them to give you money in exchange for equity or ask them for money as a loan. Either way, they risk losing their investment if the business fails. If they lend you the money, you’ll want to create a promissory note that details the terms of your agreement. The terms can be set up between you and the other party any way that is agreeable to you both: interest percents, length of repayment, etc. If they invest in exchange for equity, outline their investment and involvement in your operating agreement.