Think Twice Before Borrowing from Family
Small-business owners who ask relatives for money often run into a host of problems, say experts
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The situation is deceptively simple -- a would-be small-business owner has difficulty finding enough money to start his company. Perhaps he has bad credit and the bank denies him a loan. Perhaps he's inexperienced at running a business and unsure where to turn for funds. So, he calls up his father, mother, or a close friend and asks for their support. What could go wrong?
More than he knows. Borrowing money from family members is a complicated process fraught with tension, and business owners who choose to do so must consider the possible repercussions.