The best way to finance the start of a small business is to tap friends or relatives, suggests Home Office Computing.
It is cheaper than banks, and the terms are usually more generous.
The magazine offers the following tips:
– Put the deal in writing, and don’t forget to send the lender a thank-you note and business-related gift.
– Remember that the interest on loans is tax-deductible, but if Grandpa George decides to forgive the loan, the money is taxable as a gift.
– Stay in touch with the lender so he doesn’t think you are about to stiff him.
– Think before you leap. What will happen if the business fails or the lender falls on hard times and needs his or her money back? Siblings can be a problem if Mom or Dad dies and they want the money repaid to the estate.
