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Use caution with family loans for your business

August 10, 2008 /

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For many small businesses, bank loans, venture capital and money from angel investors are financing long shots at best. It is far more common for a small business to secure funds from family members or even friends.

Availability is the big draw. The downside is that business loans from family and friends also can be a disaster if they are not handled properly. Unstructured or loosely structured financing and pay back terms can haunt both sides in the future. Research shows that 14 percent of business loans from family and friends go into default, compared with about 1 percent for bank loans.

Stephen L. Rosenstein | Tips for Entrepreneurs

Full Story: http://www.baltimoresun.com/business/bal-bz.ml.biztip10aug10,0,2798583.column?track=rss

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