Are you looking into getting some financial funding from a family member but are not sure if it is a good idea? Well, it can be challenging working with family members and even more challenging when a large amount of money is involved. You need to consider how involved the family member will be in your business and how strong a relationship you have. Before doing anything else, create a contract, just as if you were dealing with a bank; put it in writing and spell out the terms of the loan, interest, payments, time frame, etc. Also, have a plan B in mind just in case the business fails, and make sure the family member is aware of it as well. Here are some pro and some cons for you to consider.
Pros
• More than likely they will not ask for a credit score nor perform a background check
• They may not ask for interest on the loan• If you need a favor, they may be willing to help out, unlike banks
• Possible payment flexibility
• He or she will care about the long-term success of your business...because remember, you are family!
Cons
• Relationship can be ruined
• Unwanted advice
• Family member may be demanding, even more than a bank
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