How to Keep Family and Friends Loans Strictly Business – Private Peer Loans
You may have shunned the bank by borrowing from family or friends, but you should still treat the loan as formal business. After all, borrowing money is not the same as borrowing the car. To be sure you and your family and friends have a clear idea of what financial obligations are being created, you have a mutual responsibility to make sure everyone is informed about the process and decide together how best to proceed. Drawing up a legal agreement can take some effort, and involves stating the particulars of the loan like amount, term, interest rate. It does, however, help to protect your relationship. You will also need to create a loan repayment schedule and to specify whether the loan is secured (that is, whether the lender holds title to part of your property or business) or unsecured; what the repayments will be; when they’re due; and what the interest amount is. Too frequently, business owners fail to take the time to formalise the paperwork when they borrow from fa...